XML 31 R19.htm IDEA: XBRL DOCUMENT
v3.5.0.2

Fair Value Measurements | 9 Months Ended
--- | ---
Sep. 30, 2016
Fair Value Measurements |
Fair Value Measurements | 10. Fair Value Measurements ASC 820, “Fair Value Measurements and Disclosures,” establishes a hierarchy that prioritizes fair value measurements based on the types of inputs used for the various valuation techniques (market approach, income approach, and cost approach). The levels of the hierarchy are described below:
| · |  | Level 1: Observable inputs such as quoted prices in active markets for identical assets or liabilities.
| · |  | Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly; these include quoted prices for similar assets or liabilities in active markets, such as interest rates and yield curves that are observable at commonly quoted intervals.
| · |  | Level 3: Unobservable inputs that reflect the reporting entity’s own assumptions, as there is little, if any, related market activity.
The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of assets and liabilities and their placement within the fair value hierarchy. The following methods and assumptions are used to estimate the fair value of each class of financial instruments for which it is practicable to estimate: Cash and cash equivalents The fair value of the Company’s cash and cash equivalents approximates the carrying value of the Company’s cash and cash equivalents, due to the short maturity of the cash equivalents. Long-term debt The fair value of the Company’s Term Loan A and B components of its senior secured credit facility and senior unsecured notes is estimated based on quoted prices in active markets and as such is a Level 1 measurement. The fair value of the remainder of the Company’s senior secured credit facility approximates its carrying value as it is revolving, variable rate debt and as such is a Level 2 measurement. Other long term obligations at September 30, 2016, included the relocation fees for Hollywood Gaming at Dayton Raceway and Hollywood Gaming at Mahoning Valley Race Course and the repayment obligation of a hotel and event center located near Hollywood Casino Lawrenceburg. The fair value of the relocation fees for Hollywood Gaming at Dayton Raceway and Hollywood Gaming at Mahoning Valley Race Course approximates its carrying value as the discount rate of 5.0% approximates the market rate of similar debt instruments and as such is a Level 2 measurement. Finally, the fair value of the repayment obligation for the hotel and event center is estimated based on a rate consistent with comparable municipal bonds and as such is a Level 2 measurement. See Note 6 for further details regarding the Company’s other long term obligations. Other liabilities Other liabilities at September 30, 2016 included the contingent purchase price consideration related to the purchase of Plainridge Racecourse and Rocket Games. The fair value of the Company’s contingent purchase price consideration related to its Plainridge Racecourse acquisition is estimated based on a discounted cash flow model and as such is a Level 3 measurement. The fair value of the Company’s contingent purchase price consideration related to its Rocket Games acquisition is estimated by applying an option pricing method using a Monte Carlo simulation which is a quantitative technique that estimates the distribution of an outcome variable that depends on probabilistic input variables and as such is a Level 3 measurement. At each reporting period, the Company assesses the fair value of these liabilities and changes in their fair values are recorded in earnings. The amount related to the change in fair value of these obligations resulted in a reduction to general and administrative expense of $0.3 million and $1.4 million for the three and nine months ended September 30, 2016, respectively, compared to a reduction of $6.7 million and $5.9 million for the three and nine months ended September 30, 2015, respectively. The carrying amounts and estimated fair values by input level of the Company’s financial instruments at September 30, 2016 and December 31, 2015 are as follows (in thousands):
|  | September 30, 2016 |
|  | Carrying |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Amount |  | Fair Value |  | Level 1 |  | Level 2 |  | Level 3 |
Financial assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 201,868 |  | $ | 201,868 |  | $ | 201,868 |  | $ | — |  | $ | — |
Financial liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Long-term debt |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Senior secured credit facility |  |  | 1,217,420 |  |  | 1,231,429 |  |  | 797,429 |  |  | 434,000 |  |  | — |
Senior unsecured notes |  |  | 296,734 |  |  | 310,500 |  |  | 310,500 |  |  | — |  |  | — |
Other long-term obligations |  |  | 154,469 |  |  | 157,561 |  |  | — |  |  | 157,561 |  |  | — |
Other liabilities |  |  | 66,610 |  |  | 66,610 |  |  | — |  |  | — |  |  | 66,610 |
|  | December 31, 2015 |
|  | Carrying |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Amount |  | Fair Value |  | Level 1 |  | Level 2 |  | Level 3 |
Financial assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 237,009 |  | $ | 237,009 |  | $ | 237,009 |  | $ | — |  | $ | — |
Financial liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Long-term debt |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Senior secured credit facility |  |  | 1,239,049 |  |  | 1,251,975 |  |  | 829,975 |  |  | 422,000 |  |  | — |
Senior unsecured notes |  |  | 296,252 |  |  | 291,000 |  |  | 291,000 |  |  | — |  |  | — |
Other long-term obligations |  |  | 146,992 |  |  | 147,358 |  |  | — |  |  | 147,358 |  |  | — |
Other liabilities |  |  | 13,815 |  |  | 13,815 |  |  | — |  |  | — |  |  | 13,815 |
The following table summarizes the changes in fair value of the Company’s Level 3 liabilities (in thousands):
|  | Nine Months Ended |
|  | September 30, 2016 |
|  | Liabilities |
|  | Contingent |
|  | Purchase Price |
Balance at January 1, 2016 |  | $ | 13,815 |
Additions |  |  | 55,963 |
Payments |  |  | (1,793) |
Included in earnings |  |  | (1,375) |
Balance at September 30, 2016 |  | $ | 66,610 |
The following table summarizes the significant unobservable inputs used in calculating fair value for our Level 3 liabilities:
|  |  | Valuation |  | Unobservable |  |  |  |  |  |
|  |  | Technique |  | Input |  | Discount Rate |  |  | Volatility Rate |
Contingent purchase price - Plainridge |  |  | Discounted cash flow |  | Discount rate |  | 8.30 | % |  | N/A | %
Contingent purchase price - Rocket Games |  |  | Option Pricing Method |  | Discount rate, Volatility rate |  | 9.00 | % |  | 88.50 | %

X
- References No definition available. + Details
Name: | us-gaap_FairValueDisclosuresAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure of the fair value measurement of assets and liabilities, which includes financial instruments measured at fair value that are classified in shareholders' equity, which may be measured on a recurring or nonrecurring basis. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=66048111&loc=d3e19279-110258 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=66048111&loc=d3e19207-110258 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=66048111&loc=d3e19190-110258 + Details
Name: | us-gaap_FairValueMeasurementInputsDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration