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Segment Information | 12 Months Ended
--- | ---
Dec. 31, 2015
Segment Reporting [Abstract] |
Segment Information | SEGMENT INFORMATION We manage our operations through six operating segments: Racing, Casinos, TwinSpires, Big Fish Games, Other Investments and Corporate. Eliminations include the elimination of intersegment transactions. Our chief operating decision maker utilizes Adjusted EBITDA to evaluate segment performance, develop strategy and allocate resources. Adjusted EBITDA is defined as earnings before interest, taxes, depreciation and amortization, adjusted for the following: Adjusted EBITDA includes:
• | Changes in Big Fish Games deferred revenue;
• | 50% of the operating income or loss of our joint venture, MVG;
• | 25% of the operating income from our Saratoga Casino Holdings LLC ("SCH") equity investment; and
• | Intercompany revenue and expense totals that are eliminated in the Consolidated Statements of Comprehensive Income
Adjusted EBITDA excludes:
• | Big Fish Games adjustments which include:
◦ | Acquisition-related charges, including the change in fair value of the Big Fish Games earnout and deferred consideration liability recorded each reporting period; and
◦ | Transaction expense, including legal, accounting, and other deal-related expense
• | Stock-based compensation expense;
• | Miami Valley Gaming, LLC ("MVG") interest expense, net;
• | Calder exit costs; and
• | Other charges and recoveries.
On January 1, 2014, we reclassified our equity investment in MVG from Other Investments to Casinos, to coincide with the first full period of operations for the venture. MVG's results of operations for the year ended December 31, 2013 have been reclassified to the Casinos segment. As of December 31, 2015, we have identified Corporate as its own operating segment and have retrospectively adjusted segment disclosures for prior periods to reflect this reclassification. We utilize the Adjusted EBITDA metric because we believe the inclusion or exclusion of certain recurring items is necessary to provide a more accurate measure of our 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 U.S. GAAP. Our calculation of Adjusted EBITDA may be different from the calculation used by other companies and, therefore, comparability may be limited. The table below presents net revenue from external customers and intercompany revenue from each of our operating segments:
| Year Ended December 31,
(in thousands) | 2015 |  | 2014 |  | 2013
Net revenue from external customers: |  |  |  |  |
Racing: |  |  |  |  |
Churchill Downs | $ | 151,125 |  |  | $ | 143,191 |  |  | $ | 132,845 |
Arlington | 54,405 |  |  | 60,312 |  |  | 64,483 |
Fair Grounds | 40,343 |  |  | 38,625 |  |  | 40,677 |
Calder | 2,730 |  |  | 19,325 |  |  | 36,264 |
Total Racing | 248,603 |  |  | 261,453 |  |  | 274,269 |
Casinos: |  |  |  |  |
Oxford Casino | 80,405 |  |  | 76,526 |  |  | 34,350 |
Riverwalk Casino | 49,758 |  |  | 50,139 |  |  | 53,645 |
Harlow’s Casino | 48,978 |  |  | 50,199 |  |  | 52,440 |
Calder Casino | 77,421 |  |  | 77,003 |  |  | 78,951 |
Fair Grounds Slots | 38,408 |  |  | 40,774 |  |  | 42,156 |
VSI | 36,913 |  |  | 33,653 |  |  | 35,634 |
Saratoga | 416 |  |  | — |  |  | — |
Total Casinos | 332,299 |  |  | 328,294 |  |  | 297,176 |
TwinSpires | 200,168 |  |  | 190,333 |  |  | 184,541 |
Big Fish Games: |  |  |  |  |
Casino | 193,428 |  |  | 7,627 |  |  | — |
Casual free-to-play | 125,321 |  |  | 2,098 |  |  | — |
Premium | 94,936 |  |  | 4,130 |  |  | — |
Total Big Fish Games | 413,685 |  |  | 13,855 |  |  | — |
Other Investments | 16,636 |  |  | 17,125 |  |  | 21,899 |
Corporate | 910 |  |  | 1,158 |  |  | 1,143 |
Net revenue from external customers | $ | 1,212,301 |  |  | $ | 812,218 |  |  | $ | 779,028 |
Intercompany net revenue: |  |  |  |  |
Racing: |  |  |  |  |
Churchill Downs | $ | 7,832 |  |  | $ | 7,038 |  |  | $ | 6,686 |
Arlington | 5,063 |  |  | 5,767 |  |  | 3,395 |
Fair Grounds | 1,306 |  |  | 1,089 |  |  | 1,151 |
Calder | — |  |  | 707 |  |  | 1,263 |
Total Racing | 14,201 |  |  | 14,601 |  |  | 12,495 |
TwinSpires | 1,032 |  |  | 958 |  |  | 853 |
Other Investments | 3,532 |  |  | 4,130 |  |  | 4,409 |
Eliminations | (18,765 | ) |  | (19,689 | ) |  | (17,757 | )
Net revenue | $ | — |  |  | $ | — |  |  | $ | — |
| Year Ended December 31,
(in thousands) | 2015 |  | 2014 |  | 2013
Reconciliation of segment Adjusted EBITDA to comprehensive income: |  |  |  |  |
Racing | $ | 71,841 |  |  | $ | 61,160 |  |  | $ | 50,275 |
Casinos | 108,516 |  |  | 101,106 |  |  | 80,631 |
TwinSpires | 51,533 |  |  | 45,282 |  |  | 49,122 |
Big Fish Games | 108,018 |  |  | 3,837 |  |  | — |
Other Investments | (37 | ) |  | (3,857 | ) |  | 809 |
Corporate | (4,253 | ) |  | (5,037 | ) |  | (4,606 | )
Total segment Adjusted EBITDA | 335,618 |  |  | 202,491 |  |  | 176,231 |
Change in Big Fish Games deferred revenue | (39,554 | ) |  | (4,497 | ) |  | — |
Big Fish Games adjustments | (21,748 | ) |  | (10,193 | ) |  | — |
Stock-based compensation expense | (13,849 | ) |  | (11,931 | ) |  | (21,482 | )
MVG interest expense, net | (2,098 | ) |  | (2,546 | ) |  | (170 | )
Calder exit costs | (13,854 | ) |  | (2,298 | ) |  | — |
Other charges and recoveries, net | 5,833 |  |  | (5,429 | ) |  | (1,204 | )
Depreciation and amortization | (109,706 | ) |  | (68,257 | ) |  | (61,750 | )
Interest income (expense), net | (28,553 | ) |  | (20,822 | ) |  | (6,119 | )
Income tax provision | (46,892 | ) |  | (30,161 | ) |  | (30,473 | )
Net income from continuing operations | 65,197 |  |  | 46,357 |  |  | 55,033 |
Discontinued operations, net of income taxes | — |  |  | — |  |  | (133 | )
Net income | 65,197 |  |  | 46,357 |  |  | 54,900 |
Foreign currency translation, net of tax | (463 | ) |  | (125 | ) |  | — |
Comprehensive income | $ | 64,734 |  |  | $ | 46,232 |  |  | $ | 54,900 |
The table below presents information about equity in income (losses) of unconsolidated investments included in our reported segments:
| Year Ended December 31,
(in thousands) | 2015 |  | 2014 |  | 2013
Casinos | $ | 10,929 |  |  | $ | 8,900 |  |  | $ | (3,718 | )
TwinSpires | — |  |  | (68 | ) |  | (848 | )
Other Investments | 251 |  |  | (2,504 | ) |  | 424 |
| $ | 11,180 |  |  | $ | 6,328 |  |  | $ | (4,142 | )
The table below presents total asset information for each of our operating segments:
| As of December 31,
(in thousands) | 2015 |  | 2014
Total assets: |  |  |
Racing | $ | 437,070 |  |  | $ | 456,034 |
Casinos | 631,280 |  |  | 621,489 |
TwinSpires | 177,624 |  |  | 178,694 |
Big Fish Games | 947,112 |  |  | 996,918 |
Other Investments | 37,033 |  |  | 34,083 |
Corporate | 47,325 |  |  | 69,035 |
| $ | 2,277,444 |  |  | $ | 2,356,253 |
The table below presents capital expenditures for each of our operating segments:
| Year Ended December 31,
(in thousands) | 2015 |  | 2014 |  | 2013
Capital expenditures, net: |  |  |  |  |
Racing | $ | 12,280 |  |  | $ | 33,919 |  |  | $ | 20,184 |
Casinos | 18,784 |  |  | 7,715 |  |  | 13,643 |
TwinSpires | 4,306 |  |  | 5,778 |  |  | 5,908 |
Big Fish Games | 6,431 |  |  | 116 |  |  | — |
Other Investments | 809 |  |  | 5,240 |  |  | 8,375 |
Corporate | 900 |  |  | 1,718 |  |  | 661 |
| $ | 43,510 |  |  | $ | 54,486 |  |  | $ | 48,771 |

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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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