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Document and Entity Information - shares | 3 Months Ended |
--- | --- | ---
Mar. 31, 2015 | Apr. 30, 2015
Document and Entity Information |  |
Entity Registrant Name | PENN NATIONAL GAMING INC |
Entity Central Index Key | 0000921738 |
Document Type | 10-Q/A |
Document Period End Date | Mar. 31, 2015 |
Amendment Flag | true |
Amendment Description | In this Quarterly Report on Form 10-Q/A ("Form 10-Q/A"), the terms "we", "our", the "Company" and "Penn" refer to Penn National Gaming, Inc. and its subsidiaries, unless the context indicates otherwise. As previously disclosed in the Company's Current Report on Form 8-K filed with the SEC on October 22, 2015, the Company is restating its unaudited financial statements for the interim periods ended March 31, 2015 and 2014. The Company originally concluded that its Master Lease agreement (the "Master Lease") with Gaming and Leisure Properties, Inc. ("GLPI") should be accounted for as an operating lease under Generally Accepted Accounting Principles. This accounting treatment was applied in the Company's financial statements for the years ended December 31, 2014 and 2013, respectively, which were accompanied by unqualified opinions of Ernst & Young, LLP ("EY"), the Company's independent registered public accounting firm. Upon the Company's recent reconsideration of that accounting treatment, the Company re-examined this accounting and the relevant accounting literature. The restatement primarily results from the Company's accounting for its November 1, 2013 spin-off of real estate assets to GLPI and entrance into the Master Lease, which was previously recognized as a sale-leaseback. As explained in Note 2 to the condensed consolidated financial statements included within this report, the Company did not meet all of the requirements for sale-leaseback accounting under Accounting Standards Codification ("ASC") 840, "Leases", and therefore the transaction should be accounted for as a failed spin-off-leaseback which resulted in the transaction being recorded as a financing obligation rather than a distribution of assets followed by an operating lease. As a result, the Company is precluded from derecognizing the real estate assets and is instead required to recognize a financing obligation. The restated condensed consolidated balance sheets therefore include an adjustment to property and equipment, net for the carrying value of the real property leased from GLPI of $2.02 billion and $2.04 billion at March 31, 2015 and December 31, 2014, respectively, and additional liabilities of $3.60 billion and $3.61 billion at March 31, 2015 and December 31, 2014, respectively, representing the present value of the future minimum lease payments due to GLPI under the Master Lease. Consequently, the restated condensed consolidated statements of operations no longer report rent expense for the obligations under the Master Lease, but rather include interest expense associated with the financing obligation and depreciation expense related to the real estate assets, along with the periodic reduction of the financing obligation reflected in the condensed consolidated balance sheets. The lease payment amounts previously recorded as rent expense were $108.8 million and $104.3 million for the three months ended March 31, 2015 and 2014, respectively. The increases to interest expense and depreciation expense as a result of this restatement are $96.0 million and $19.9 million, respectively, for the three months ended March 31, 2015, and $93.1 million and $22.3 million, respectively, for the three months ended March 31, 2014. Additionally, this change in accounting treatment resulted in adjustments to the carrying amounts of the Company's reporting units as well as differences in the allocation of the Company's GLPI financing obligation to the impacted reporting units, which changed each reporting unit's fair value. This resulted in a net decrease to the Company's previously recognized impairment charges related to goodwill and indefinite-lived gaming licenses for the year ended December 31, 2014. The Company has also included in the restated condensed consolidated financial statements corrections of additional errors related to the accounting classification for payments made to relocate certain gaming operations in Ohio which opened in 2014, classification of an operating lease to a capital lease which resulted in an increase of $6.5 million and $7.0 million at March 31, 2015 and December 31, 2014 to net property and equipment and an increase to long term debt of $24.9 million at both March 31, 2015 and December 31, 2014, as well as certain other miscellaneous items described in Note 2 to the condensed consolidated financial statements included in this report. Finally, the Company concluded that as a result of the failed spin-off-leaseback accounting treatment which resulted in a significant increase to our net deferred tax assets, a valuation allowance should be recorded on our net deferred tax assets given the significant negative evidence associated with being in a three year cumulative pre-tax loss position and the insufficient objectively verifiable positive evidence to support the realization of the Company's deferred tax assets. This Amendment No. 1 on Form 10-Q/A ("Form 10-Q/A") to our Quarterly Report on Form 10-Q for the three months ended March 31, 2015, initially filed with the Securities and Exchange Commission (the "SEC") on May 6, 2015 (the "Original Filing"), is being filed to reflect the restatement of (i) the Company's condensed consolidated balance sheets at March 31, 2015 and December 31, 2014 and (ii) the Company's condensed consolidated statements of income, comprehensive income, stockholders' equity (deficit) and cash flows for the three months ended March 31, 2015 and 2014, and the notes related thereto. For a more detailed description of these restatements see Note 2 to the accompanying condensed consolidated financial statements in this Form 10-Q/A. Notably, the adjustments in the Restatement did not have a significant impact on the Company's leverage ratios under its senior credit facility and other debt instruments (as the terms of those obligations require the Master Lease to be treated as an operating lease regardless of the treatment required under GAAP) had no, and will have no future impact on the following indicators of the Company's performance: • the Company's cash position; • the Company's revenues from continuing operations; or • the Company's rental payments or other obligations under the Master Lease. For the convenience of the reader, this Form 10-Q/A sets forth the Original Filing in its entirety. However, this Form 10-Q/A only amends and restates Items 1, 2, and 4 of Part I of the Original Filing, in each case, as a result of, and to reflect the restatement. No other information in the Original Filing is amended. In addition, pursuant to the rules of the SEC, Item 6 of Part II of the Original Filing has been amended to contain the currently-dated certifications from our Chief Executive Officer and Chief Financial Officer, as required by Sections 302 and 906 of the Sarbanes-Oxley Act of 2002. The certifications of our Chief Executive Officer and Chief Financial Officer are attached to this Form 10-Q/A as Exhibits 31.1, 32.1, 31.2 and 32.2, respectively. For a more detailed description of these restatements see Note 2 to the accompanying consolidated financial statements in this Form 10-Q/A. |
Current Fiscal Year End Date | --12-31 |
Entity Current Reporting Status | Yes |
Entity Filer Category | Large Accelerated Filer |
Entity Common Stock, Shares Outstanding |  | 79,812,962
Document Fiscal Year Focus | 2015 |
Document Fiscal Period Focus | Q1 |

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