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Summary of Significant Accounting Policies (Tables) | 9 Months Ended
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Sep. 30, 2018
Summary of Significant Accounting Policies |
Schedule of promotional allowances |
Three Months Ended September 30, |  | 2018
|  | (in thousands)
Lodging |  | $ | 10,490
Food and beverage |  |  | 30,567
Other |  |  | 1,687
Total amount recorded in food, beverage, hotel and other revenues and offset to gaming revenues |  | $ | 42,744
Nine Months Ended September 30, |  | 2018
|  | (in thousands)
Lodging |  | $ | 30,793
Food and beverage |  |  | 77,317
Other |  |  | 3,697
Total amount recorded in food, beverage, hotel and other revenues and offset to gaming revenues |  | $ | 111,807
Schedule of estimated cost of providing complimentary services |
Three Months Ended September 30, |  | 2018
|  | (in thousands)
Lodging |  | $ | 1,481
Food and beverage |  |  | 11,509
Other |  |  | 574
Total cost of complimentary services included in food, beverage, hotel and other expense |  | $ | 13,564
Nine Months Ended September 30, |  | 2018
|  | (in thousands)
Lodging |  | $ | 4,302
Food and beverage |  |  | 28,969
Other |  |  | 1,151
Total cost of complimentary services included in food, beverage, hotel and other expense |  | $ | 34,422
Schedule of disaggregation of revenue | Our revenue disaggregation by type of revenue and geographic location is as follows (in thousands):
Three Months Ended September 30, 2018 |  | Northeast |  | South/West |  | Midwest |  | Other |  | Total
Gaming |  | $ | 356,787 |  | $ | 93,580 |  | $ | 195,968 |  | $ | - |  | $ | 646,335
Food and beverage |  |  | 21,669 |  |  | 30,572 |  |  | 17,080 |  |  | 230 |  |  | 69,551
Lodging |  |  | 2,684 |  |  | 23,279 |  |  | 9,004 |  |  | - |  |  | 34,967
Racing |  |  | 3,842 |  |  | 122 |  |  | - |  |  | 1,451 |  |  | 5,415
Reimbursable management costs |  |  | 3,910 |  |  | - |  |  | - |  |  | - |  |  | 3,910
Other |  |  | 9,926 |  |  | 5,435 |  |  | 5,855 |  |  | 8,257 |  |  | 29,473
Total net revenues |  | $ | 398,818 |  | $ | 152,988 |  | $ | 227,907 |  | $ | 9,938 |  | $ | 789,651
Nine Months Ended September 30, 2018 |  | Northeast |  | South/West |  | Midwest |  | Other |  | Total
Gaming |  | $ | 1,076,709 |  | $ | 290,890 |  | $ | 598,324 |  | $ | - |  | $ | 1,965,923
Food and beverage |  |  | 60,419 |  |  | 88,475 |  |  | 48,225 |  |  | 812 |  |  | 197,931
Lodging |  |  | 6,950 |  |  | 70,899 |  |  | 25,921 |  |  | - |  |  | 103,770
Racing |  |  | 14,009 |  |  | 228 |  |  | - |  |  | 4,638 |  |  | 18,875
Reimbursable management costs |  |  | 46,822 |  |  | 10,459 |  |  | - |  |  | - |  |  | 57,281
Other |  |  | 31,064 |  |  | 16,702 |  |  | 15,982 |  |  | 25,121 |  |  | 88,869
Total net revenues |  | $ | 1,235,973 |  | $ | 477,653 |  | $ | 688,452 |  | $ | 30,571 |  | $ | 2,432,649
Schedule of reconciliation of the weighted-average common shares outstanding used in the calculation of basic EPS to the weighted-average common shares outstanding used in the calculation of diluted EPS |
|  | Three Months Ended September 30, |  | Three Months Ended September 30, |  | Nine Months Ended September 30, |  | Nine Months Ended September 30,
|  | 2018 |  | 2017 |  | 2018 |  | 2017
|  | (in thousands) |  | (in thousands)
Determination of shares: |  |  |  |  |  |  |  |
Weighted-average common shares outstanding |  | 91,948 |  | 90,913 |  | 91,538 |  | 90,865
Assumed conversion of dilutive employee stock-based awards |  | 3,163 |  | 2,582 |  | 3,264 |  | 1,957
Assumed conversion of restricted stock |  | 223 |  | 94 |  | 213 |  | 81
Diluted weighted-average common shares outstanding |  | 95,334 |  | 93,589 |  | 95,015 |  | 92,903
Schedule of calculation of basic and diluted EPS for the entity's common stock | The following table presents the calculation of basic and diluted EPS for the Company’s common stock for the three and nine months ended September 30, 2018 and 2017 (in thousands, except per share data):
|  | Three Months Ended September 30, |  | Three Months Ended September 30, |  | Nine Months Ended September 30, |  | Nine Months Ended September 30,
|  | 2018 |  | 2017 |  | 2018 |  | 2017
Calculation of basic EPS: |  |  |  |  |  |  |  |  |  |  |  |
Net income applicable to common stock |  | $ | 36,125 |  | $ | 789,340 |  | $ | 135,550 |  | $ | 811,523
Weighted-average common shares outstanding |  |  | 91,948 |  |  | 90,913 |  |  | 91,538 |  |  | 90,865
Basic EPS |  | $ | 0.39 |  | $ | 8.68 |  | $ | 1.48 |  | $ | 8.93
Calculation of diluted EPS using two-class method: |  |  |  |  |  |  |  |  |  |  |  |
Net income applicable to common stock |  | $ | 36,125 |  | $ | 789,340 |  | $ | 135,550 |  | $ | 811,523
Diluted weighted-average common shares outstanding |  |  | 95,334 |  |  | 93,589 |  |  | 95,015 |  |  | 92,903
Diluted EPS |  | $ | 0.38 |  | $ | 8.43 |  | $ | 1.43 |  | $ | 8.74
Weighted-average assumptions used in Black-Scholes option pricing model |
Nine months ended September 30, |  | 2018 |  | 2017 |
Risk-free interest rate |  | 2.26 | % | 1.97 | %
Expected volatility |  | 30.80 | % | 30.67 | %
Dividend yield |  | — |  | — |
Weighted-average expected life (years) |  | 5.30 |  | 5.30 |
Schedule of information with respect to the Company's segments | The following tables (in thousands) present certain information with respect to the Company’s segments. Intersegment revenues between the Company’s segments were not material in any of the periods presented below.
|  | Three months ended |  | Nine months ended |
|  | September 30, |  | September 30, |
|  | 2018 |  | 2017 |  | 2018 |  | 2017 |
Net Revenues |  |  |  |  |  |  |  |  |
Northeast | $ | 398,818 | $ | 401,818 | $ | 1,235,973 | $ | 1,200,382 |
South/West |  | 152,988 |  | 160,153 |  | 477,653 |  | 453,123 |
Midwest |  | 227,907 |  | 232,051 |  | 688,452 |  | 685,236 |
Other (1) |  | 9,938 |  | 12,225 |  | 30,571 |  | 40,193 |
Total Reportable Segment Net Revenues |  | 789,651 |  | 806,247 |  | 2,432,649 |  | 2,378,934 |
Adjusted EBITDA |  |  |  |  |  |  |  |  |
Northeast |  | 128,910 |  | 127,644 |  | 397,844 |  | 384,094 |
South/West |  | 38,910 |  | 35,046 |  | 130,608 |  | 106,436 |
Midwest |  | 77,760 |  | 76,044 |  | 237,923 |  | 229,640 |
Other (1) |  | (15,881) |  | (13,516) |  | (47,024) |  | (40,103) |
Total Reportable Segment Adjusted EBITDA |  | 229,699 |  | 225,218 |  | 719,351 |  | 680,067 |
Other operating costs and other expenses (income) |  |  |  |  |  |  |  |  |
Depreciation and amortization |  | 56,852 |  | 66,483 |  | 175,801 |  | 205,688 |
Unconsolidated non-operating costs - Kansas JV |  | 1,271 |  | 1,310 |  | 3,844 |  | 4,570 |
Interest expense |  | 114,844 |  | 118,236 |  | 346,457 |  | 350,000 |
Interest income |  | (246) |  | (304) |  | (736) |  | (3,185) |
Loss on disposal of assets |  | 3,220 |  | 96 |  | 3,223 |  | 103 |
Provision (recovery) for loan loss and unfunded loan commitments to the JIVDC and impairment losses |  | — |  | 24,317 |  | (16,367) |  | 29,952 |
Insurance recoveries |  | — |  | — |  | (68) |  | — |
Cash-settled stock award variance |  | (1,692) |  | 1,583 |  | (1,354) |  | 12,839 |
Pre-opening and significant transaction costs |  | 5,187 |  | 1,848 |  | 17,159 |  | 4,593 |
Loss on early extinguishment of debt and modification costs |  | 311 |  | — |  | 3,772 |  | 23,390 |
Other |  | 1,435 |  | 236 |  | 1,479 |  | 2,202 |
Contingent purchase price |  | 407 |  | (20,716) |  | 1,743 |  | (16,794) |
Charge for stock compensation |  | 2,915 |  | 1,853 |  | 8,847 |  | 5,827 |
Income before income taxes |  | 45,195 |  | 30,276 |  | 175,551 |  | 60,882 |
Income taxes |  | 9,070 |  | (759,064) |  | 40,001 |  | (750,641) |
Net income | $ | 36,125 | $ | 789,340 | $ | 135,550 | $ | 811,523 |
|  |  | Northeast |  |  | South/West |  |  | Midwest |  |  | Other (1) |  |  | Total |
Three months ended September 30, 2018 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Capital expenditures |  | $ | 9,921 |  | $ | 4,616 |  | $ | 8,493 |  | $ | 973 |  | $ | 24,003 |
Three months ended September 30, 2017 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Capital expenditures |  | $ | 5,621 |  | $ | 12,681 |  | $ | 7,935 |  | $ | 1,045 |  | $ | 27,282 |
Nine months ended September 30, 2018 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Capital expenditures |  | $ | 21,397 |  | $ | 13,352 |  | $ | 17,869 |  | $ | 4,343 |  | $ | 56,961 |
Nine months ended September 30, 2017 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Capital expenditures |  | $ | 15,144 |  | $ | 33,227 |  | $ | 19,611 |  | $ | 2,260 |  | $ | 70,242 |
Balance sheet at September 30, 2018 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Total assets (1) |  | $ | 809,208 |  | $ | 763,654 |  | $ | 1,072,406 |  | $ | 2,438,574 |  | $ | 5,083,842 |
Investment in and advances to unconsolidated affiliates |  |  | 105 |  |  | — |  |  | 84,891 |  |  | 39,657 |  |  | 124,653 |
Goodwill |  |  | 21,242 |  |  | 244,695 |  |  | 674,558 |  |  | 68,396 |  |  | 1,008,891 |
Other intangible assets, net |  |  | 360,643 |  |  | 690 |  |  | 98,998 |  |  | 12,637 |  |  | 472,968 |
Balance sheet at December 31, 2017 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Total assets (1) |  | $ | 821,649 |  | $ | 794,274 |  | $ | 1,070,204 |  | $ | 2,548,685 |  | $ | 5,234,812 |
Investment in and advances to unconsolidated affiliates |  |  | 102 |  |  | — |  |  | 88,296 |  |  | 60,514 |  |  | 148,912 |
Goodwill |  |  | 21,242 |  |  | 244,695 |  |  | 674,558 |  |  | 67,602 |  |  | 1,008,097 |
Other intangible assets, net |  |  | 303,043 |  |  | 1,623 |  |  | 101,698 |  |  | 16,242 |  |  | 422,606 |
(1) Other also includes corporate overhead operations as well as Penn Interactive Ventures, which is a wholly-owned subsidiary that is focused on the Company’s interactive gaming strategy. Total assets include the real property assets under the Master Lease with GLPI. Net revenues and adjusted EBITDA relate to the Company’s stand-alone racing operations, namely Sanford Orlando Kennel Club and the Company’s joint venture interests in Texas and New Jersey which do not have gaming operations.

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