PENN Entertainment Inc (PENN) 2015 Q3 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to the Penn National Gaming third-quarter results conference call. (Operator Instructions). And I would now like to turn the conference over to Mr. Joe Jaffoni, Investor Relations. Please go ahead, sir.

Thank you, Chris. Good morning, everyone, and thank you for joining Penn National Gaming's 2015 third-quarter conference call.

We will get to management's presentation and comments momentarily, as well as your questions and answers, but first I will read the Safe Harbor disclosure.

In addition to historical facts or statements of current conditions, today's conference call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which involve risks and uncertainties. These statements can be identified by the use of forward-looking terminology, such as expects, believes, estimates, projects, intends, plans, seeks, may, will, should, or anticipates, or the negative or other variations of these or similar words, or by discussion with future events, strategies, or risks and uncertainties, including future plans, strategies, performance, developments, acquisitions, capital expenditures, and operating results.

Such forward-looking statements reflect the Company's current expectations and beliefs, but are not guarantees of future performance. As such, actual results may vary materially from expectations. The risks and uncertainties associated with the forward-looking statements are described in today's news announcement and in the Company's filings with the Securities and Exchange Commission, including the Company's reports on Form 10-K and 10-Q.

Penn National assumes no obligation to publicly update or revise any forward-looking statements.

Today's call and webcast will include non-GAAP financial measures within the meaning of SEC Regulation G. When required, a reconciliation of all non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP can be found in today's press release, as well as on the Company's website.

With that, it is now my pleasure to turn the conference call over to the Company's CEO, Tim Wilmott. Tim?

Thank you, Joe, and good morning and welcome to Penn National Gaming's third-quarter 2015 earnings conference call.

I'd like to begin by introducing who is in the room with me today. First, our Chief Development Officer, BJ Fair; our Head of Public Affairs, Eric Schippers; our General Counsel, Carl Sottosanti; our Chief Operating Officer, Jay Snowden; our Chief Financial Officer, Saul Reibstein; and our Head of Digital Gaming, Chris Sheffield.

I would like to first begin and do something a little bit different than our normal calls and ask Saul to speak to the accounting classification change that we announced this morning regarding our master lease with GLPI. Then I will come back and give you some more color on our third-quarter highlights and that will be followed by Jay giving more insight into our operations, and followed by Saul again to talk about some of our guidance thoughts for the fourth quarter and other financial statistics; then, we will open it up for questions. But let's start with Saul.

Thanks, Tim. Good morning, everyone.

We were recently advised by our audit partners from Ernst & Young that their national office had undertaken a new review of the accounting for our master lease with GLPI.

By way of background, E&Y has issued unqualified opinions on our financial statements and the underlying accounting policies for all of the reporting periods subsequent to the spin transaction, including the years ended December 31, 2013, and 2014. They also reviewed our quarterly financial statements for all quarters in those periods, as well as the first and second quarters of 2015.

In each case, our operating lease accounting treatment for the master lease was never questioned. Further, as you may know, the FASB is expected to issue a pronouncement before the end of the year that will require all long-term leases to be recorded as liabilities by 2018.

Upon being advised of this review, we engaged outside consultants with deep expertise in lease accounting to assist us, and this week we determined to move forward with the reclassification. Further, to be clear, this change in accounting will have no impact on revenue, cash position, cash flow, leverage ratios under our credit agreement, or rent under the master lease, all of which are among the most important metrics used to evaluate the Company's performance. Nor does it change our ongoing operations or growth pipeline in any way.

This change in method will be reflected as follows. Our balance sheet will now contain a long-term liability equal to the present value of the future lease payments over the next 35 years, discounted to present value using our incremental borrowing rate. It will also contain an asset that will be recorded at the historical book value of the related property. The difference between these two amounts will be charged to retained earnings at the date of the spin.

Our income statement will no longer contain a charge for rent expense, but instead will have a non-cash charge for depreciation of the leased assets and interest expense as the obligation amortizes.

At this time, we are in the process of estimating each of the items described. We expect to be able to file amended statements and our Form 10-Q for September 30, 2015, before the planned filing of our 2015 Form 10-K, and will, of course, file earlier if possible. However, at this time we estimate that the long-term liability that we will record will not cause our leverage levels to vary materially from current levels when rent under the master lease is included, as most of the users of our financial statements already do.

Importantly, the agreements covering our debt obligations already provide that all of the financial covenants are to be computed assuming the master lease is accounted for as an operating lease. Therefore, we expect to remain in full compliance with all of our covenants. Notwithstanding our compliance, since our financials for 2013 and 2014 will need to be amended and our Form 10-Q will not be filed until after its due date, we have requested our banks to provide a waiver of those requirements, and having discussed this request with all of our lead banks, we have no reason to believe that we will not receive these waivers in the ordinary course.

In addition, based on consultation with our advisors, we believe this change in accounting will have no impact to previous or future federal or state income tax filings.

Finally, I want to repeat again what we believe is the most notable takeaway. The adjustments contemplated by this change will have no impact on any of the Company's key performance indicators, including our cash position; our cash flows; our leverage ratios under our credit agreements; our revenues; the amount of annual rent payments under the master lease; the amount of our reported EBITDAR, which now becomes our EBITDA; or our ongoing operations and our development and growth pipelines.

Thanks, Tim.

Thank you, Saul.

Now I would like to turn our attention to the third-quarter performance, which I would characterize as very solid in both regards to our operating performance and the development activity we achieved to continue to grow this Company over the next three to four years.

We enjoyed the first full quarter year over year of our two Ohio racinos in Dayton and in Austintown and we also reported the first full quarter of our Plainridge Park racino operation in Massachusetts, which Jay is going to give more color on. But in all three cases, we are already achieving a 20% cash-on-cash return on our three investments at these locations.

I am pleased to report that we exceeded EBITDA guidance by just under $3 million, when you take out all of the one-time adjustments. Our consumer trends that we saw in the third quarter were consistent what we saw in the first two quarters of 2015, and I am also pleased to report that we continued to, in our operations, manage our expenses very tightly and we continue to show EBITDA margin improvement.

Late in August, we completed the $360 million purchase of Tropicana Las Vegas, and we are now about two months into the management of that business. Jay is going to give you some perspective on what we have seen in the first two months. It is all going as planned, and we look forward to activating the 3 million active customers in our database when we link up our Marquee Rewards player loyalty program in the second quarter of 2016.

About a week after we completed the purchase of Tropicana Las Vegas, we acquired a slot route operator in Illinois, Prairie State Gaming, on September 1, and this got us an opportunity to take advantage of a platform of gaming that is legal today in seven states. It represents about $2 billion of annual revenues.

We do believe down the road more states will consider this type of gaming platform as a new source of revenue. We are pleased with the Prairie State Gaming platform that we've acquired, with 1,100 terminals in the state of Illinois in about 270 locations. We see this as a platform for growth as we continue to look to consolidate this industry in Illinois and elsewhere.

Also in the third quarter, based on some research that we did with our active slot rated players, who are very much interested in playing social games -- research indicated that over 40% of them are social gamers, we launched our Play 4 Fun product in partnership with Scientific Games at our Charles Town and Penn National facilities with those customers. We plan to roll them out -- roll this product out and other products out to our database over the course of the next couple quarters, and I am pleased to report that we are now generating revenue in this new product line and see this as a growth opportunity for us in 2016, 2017, and beyond.

And finally, we continue to make good progress in San Diego with the Hollywood Casino Jamul project that is on target for a mid-2016 opening, about 19 to 20 miles due east of downtown San Diego. We're excited about that opportunity and we will continue to report progress on that as we get to the opening mid-part of next year.

With that, I would like to turn it over to Jay to give you all a little bit more color into our operations.

Thanks, Tim, and good morning to everyone.

On a same-store basis, I think you will find our third-quarter commentary to be largely consistent with what you heard from us on our last earnings call when we recapped the second quarter. We continue to be encouraged by an improving consumer environment, driven by lower sustained gas prices and a strengthening labor market both in terms of employment and some modest wage growth. We did experience relative softness in the month of August, which was well documented, due to the holiday orientation for Labor Day, as well as the calendar shift on a year-over-year basis, which was offset by solid months in both July and September.

Some specific third-quarter highlights at the property level, as Tim mentioned we closed on Tropicana Las Vegas in late August and we continue to make good progress after our first couple of months with the key. Our new senior property leadership team is in place and we are working through our integration and operational improvement plan.

Phase 1 in capital deployment efforts have commenced and those are focused largely on improving the gaming and food and beverage offering and experiences on property, as well as implementation of Marquee Rewards, which will take place in the spring of 2016.

We also closed on Prairie State Gaming on September 1 and we are in the process of integrating that slot route operation into the Penn family. We are encouraged by the growth prospects, as Tim alluded to, in this [new] business channel, the more time we spend exploring potential opportunities.

In Massachusetts, we're seeing more stabilized revenue trends in September and October and actually posted our busiest day since opening day the first Saturday of October. We now have nearly 130,000 unique player accounts and our unaided and overall awareness levels in Boston are already comparable to Twin River after only a few months of operation, so clearly our aggressive preopening and third-quarter advertising efforts are paying off in that regard.

Our current priority, however, is driving more frequent visitation from the higher-value Boston-based customer segment, as our marketing focus now shifts from new player acquisition to driving loyalty with those 130,000 players in the database.

We also continue to make adjustments to the gaming mix as we remove underperforming electronic table games and replace them with higher-performing, higher-yielding slot machines. We have increased the size of our high-limit offering by 50%. That has been well received; it took place in early September. We have doubled the number of video poker games and continue to make tweaks along the way.

And last update on the property level, we did deliver in the third quarter profitable market-share gains in some of our more mature markets, specifically in St. Louis; Kansas City; Joliet, Illinois; and parts of Ohio, so hats off to our property leadership teams in those markets. I know they're on the call.

From a database perspective, we did see similar to Q2 an increase in spend per visit across all of our rated and unrated segments in the quarter. Visitation was a good story with seeing growth in the mid and upper tiers, whereas at the lower tiers it is more flat to slightly down, depending on the market.

And then last, but not least, October to date, we are seeing revenue trends that largely mirror what we experienced in the third quarter, so I am sure there will be plenty of questions. With that, I will hand it off to Saul to walk you through the fourth-quarter guidance.

Thanks, Jay.

During the third quarter, our economy continues to move along at the same slow and steady pace it has for much of the year. The third quarter was marked by lower oil prices, low growth in healthcare spending, and growth in both bank loans and housing, offset by a modest slowdown in consumer spending. Initial unemployment claims are at their lowest levels in the last seven months. And as you have seen from our release, our property-level and operating results have exceeded guidance.

As we reached the fourth quarter, we followed our normal practice of evaluating each of our properties, now including Tropicana Las Vegas, our VGT route operations in Illinois, and the iGaming operations as well. Based upon our best estimates and, as Jay mentioned, looking at early October numbers, we have revised net revenue and EBITDA guidance for the year to $2.827 billion and $771.1 million, respectively, and, further, we have updated our estimate of total cash basis rent to $436.4 million for all of 2015.

And as we mentioned last quarter, we are continuing our efforts to find direct third-party financing alternatives for the Jamul development in San Diego.

Page 6 of our press release provides current estimates for corporate overhead, interest, rent payments under the master lease, non-cash stock compensation, and depreciation and amortization.

In addition, some of our other key data points are cash on hand at September 30 of $223 million; all of our debt covenant ratios have been comfortably met; project CapEx, inclusive of the Jamul Village project, for 2015 is estimated at $336 million, with $89 million in the fourth quarter; maintenance CapEx for 2015 is estimated at $74 million, with $32 million of that in the fourth quarter; our GAAP basis effective tax rate for the balance of 2015 is currently estimated at 43%; and, finally, free cash flow before project CapEx and principal repayment of $312 million for the year.

And with that overview, we can open for questions.

Chris, we are now ready to take questions from the audience.

(Operator Instructions). Carlo Santarelli, Deutsche Bank.

I actually have two questions, if you don't mind. For starters, is it fair to assume that some of the accounting change, which sounds rather innocuous, based on your commentary, stem from maybe some other work that auditors are doing around these types of spins and leases in general?

And then part two of my question, with all the moving parts and the inclusion of Tropicana and Prairie State obviously into the guidance now, would you guys mind providing maybe some backdrop on how you -- or how same-store trends have changed implied for the 4Q within the guidance?

Why don't you take the first one, Saul?

Sure.

Maybe Jay, you take the second.

We are not going to comment on the impact of our restatement to other gaming companies. Everybody has to do their own evaluation of their individual situations and it would be inappropriate for us to comment.

And our issues were specific to our master lease agreement with GLPI.

And then with regards to the fourth-quarter guidance assumptions, really the difference in fourth-quarter guidance from where we were after the second quarter is a true-up for the beat here in the third quarter. The same-store assumptions for the fourth quarter have remained the same.

As we talked about on our last earnings call, we did assume, however, that the winter this fourth quarter would be more normal, whereas last year it was very mild in November and December, if you recall, and we did make an adjustment, lastly, for Tropicana and Prairie State Gaming.

Okay, great, Jay. And then just to follow up quickly on the comment that you made on October, I think you said it looked similar to the 3Q. I am assuming that's the 3Q in its entirety and not just the select weaker or better months.

That's right. It's a third-quarter blend is what I was referencing, not specifically any month in the third quarter.

Great. Thank you, guys.

Felicia Hendrix, Barclays.

My question is for either Tim or Jay. First, on Plainridge, you guys have talked in the past about the adjustment period to get to a more normalized run rate and it was in the release as well. Just can you refresh us on your thinking about what the normal run rate there is?

And then, also, just regarding the work you have been doing to remix the slot floor, just wondering what kind of incremental win per unit per day or return you're expecting to get from that?

Sure, Felicia. We typically look at month three, month four as the stabilized months post opening and we typically see revenue growth beyond those months. Now the revenue growth beyond that stabilized level depends on the market, so we have seen some close in the 10%, 12% range and we have seen some at 20%.

I think you can look at our Ohio opening. You can look at the Northfield, Ohio, Hard Rock racino, which I think is probably a decent proxy for what we anticipate for the subsequent growth post-stabilized period here at Plainridge. And so, that's how we are thinking about the future six, nine months to close out the first year of operation.

The one thing that I would throw out there, just to remember, is that we are headed into the winter, so we don't anticipate it being very stable. It's probably going to be volatile, depending on how harsh or mild the winter is in New England, particularly given what it was last year in February and March.

So, that's how we are thinking about where we are today and what we anticipate over the coming six to nine months.

With regards to the gaming mix, the changes we have made, we have seen a great response from our customer database. So as we expanded high limits by 50%, we're seeing win per units in that area continue to maintain very strong performance, and video poker changes that we have made, we've doubled the number of units and win per units have maintained. So we're going to continue to make adjustments.

The only real disappointment on the game mix has been the electronic table games, which I don't think is terribly shocking, given that we have got competitors with live tables a pretty short distance from our location there, but we're finding that outside of maybe some of the real innovative roulette, craps, and a little bit on the blackjack side, there is really no demand for the Asian electronic table game offerings and even roulette, craps, and blackjack only to an extent.

So we will continue to make changes on the electronic table game side, and where it makes sense, we will add slot machines back to the floor. Removing 10 electronic table game seats for one or two slot machines probably [would] make sense in some cases, and so we will continue to make those adjustments.

Thanks, and then just switching gears to Tropicana, as you guys have been digging in there, can you just give us an update on your expectations for EBITDA from that property and returns and perhaps timing to get to your goals?

Sure. We have said we don't -- we try to stay away from specific property guidance. Felicia, as you know, we have said all along that we have got about a three-year horizon here and we anticipate that at the end of that third year, we're going to look at our EBITDA generated from that property and we will have acquired and invested in that property and be at less than a 10 multiple on EBITDA. So that's what I would continue to say.

I think that the one thing I would throw out for next year is that we are going to be implementing Marquee Rewards in the second quarter, and it is -- from now until then, we're really focusing on operational improvements and rightsizing the cost structure and there is going to be some friction expenses, severance expenses, et cetera, associated with some of those changes. So I wouldn't expect a lot from this particular property through the first half of next year, but we anticipate some revenue growth the second half of the year at a good margin.

And Felicia, we continue to be encouraged by what we see in the business and the location.

I want to remind everyone that right about the same time we are going to be rolling out Marquee Rewards next spring, the new MGM Arena is expected to open, as well, to create much more energy down on that intersection of Tropicana and Las Vegas Boulevard. So we're as bullish as we have ever been about the prospects of Tropicana Las Vegas over the next three to four years.

Great. Thank you so much.

Joseph Greff, JPMorgan.

Tim, just wanted to ask you a question on one of your comments that you had in the press release and you then reiterated it on the call here this morning. In terms of the three new properties generating that 20% or approximate 20% EBITDA return, can you just flesh out that comment with respect to Plainridge Park Casino? How are you looking at that and saying it is run rating or generating an approximate 20% EBITDA return?

Yes, we looked at the operating cash flows for the third quarter and annualized it and just did that calculation based on the level of investment, and that's how we came to that conclusion.

So 3Q EBITDA times four, divided by the CapEx, is -- okay.

That's the math.

All right, I just wanted to make sure it wasn't some other nuanced way of looking at it, but I can do that without using a calculator. That's all for me. Thank you.

Joel Simkins, Credit Suisse.

We have been hearing a bit of a theme around rising wages, obviously with Wal-Mart and some of the restaurant chains. Have you guys been seeing anything from a cost side of the equation that would limit, potentially, some of the flowthrough as the topline continues to get better?

Joel, this is Jay. No, at this stage, although there is a couple of markets we operate -- Columbus comes to mind -- where unemployment rates have dropped so significantly, which, of course, on one hand is good for business and business volumes, but on the other hand has made it a very challenging labor market for us in terms of recruitment and hiring.

But no, generally speaking, we have not experienced any pressure to increase wages based on some of the changes that have been made at some of the larger businesses on the retail front, like Wal-Mart.

Sure, and a couple quick follow-ups here on Plainridge. Can you just give us a sense, and if you are willing to share it, great, just where your customers are coming from? Is it north or south of the location?

And then, I guess, given the fact that Twin River is a pretty established competitor, they have got tables, they have got smoking, do you feel like you need to add any more amenities to Plainridge just to get that repeat business or, let's say, a rewards redemption?

Sure, Joel. So we're seeing business coming from all directions. Overall in the database, we've got about 80%-plus, 82% of the business is coming from Massachusetts, about 12% is coming from Rhode Island, and then the rest is Connecticut and other parts of New England.

Twin River has been around for a while. It is going to be a formidable competitor for us, but I don't think from an offering perspective we feel as though we are disadvantaged. It is still early. We are seeing our service scores, which we -- we conduct surveys at all of our properties. Our service scores at Plainridge Park Casino and the response to what we are offering and how we are executing on the food and beverage side have been largely positive, and if we need to make adjustments down the road, we'll do that. But at this point, we feel like we have a good offering there and can be competitive.

We really just -- our focus now, as I mentioned earlier, is less on acquisition. We are very happy with the 130,000 customers in the database and we need to drive more repeat visitation from those customers going forward, and that's a marketing situation and we think we have got some ideas that will allow us to drive success in that endeavor as we move forward.

Thank you very much.

Steve Wieczynski, Stifel Nicolaus.

So if I could ask one more Plainridge question, and I know you guys are probably sick of it, but I think it was Felicia's question and maybe asking a little bit more directly, but I know in the past you have talked about a $500 win per day metric out of that property. Do you guys at this point still feel pretty comfortable with that number?

And I guess, Jay, a question around Plainridge would be, do you think there could be a little bit more seasonality with this asset, meaning that this could be an asset that does do better in the winter months versus the summer months?

Well, I will start with your question on the win per unit. I think that we're realistically looking at win per unit, the number starts with a 4 versus a 5. That's what we're seeing in the business right now and I think that's still a very solid win per unit. But we are confident it will start with a 4.

With regards to seasonality, Steve, we will see. We have looked at Connecticut results and we have looked at Twin River's results and it would tell you that during harsh winters, obviously, those are some of the softer months of the year. But it really does depend on the weather. And what we're finding is that during football season, especially with the Patriots being undefeated, is that on Sundays a couple of hours before the game, whether home or away, and during the game and largely after the game, it is tough to drive customers into the casino.

So we will see how that changes throughout the winter and what happens in February when football season is behind us, but it is hard to comment on seasonality until we get through a full first year.

Okay, got you. And then, second question, I guess more of a high-level question. I am not sure you're going to answer it.

But as we start to look to 2016, I guess how are you guys viewing your overall operating environment as we move into next year? Is it going to be -- are you guys thinking about it as a status quo type environment? And are there any assets in your portfolio that you might want to call out in terms of potential risk, whether it is increased competition or cannibalization? That might be helpful as well.

Steve, we have got about three more months of history to look at before we start talking about 2016 guidance, but right now we have seen three solid quarters in 2015, and if I had to say right now, I think we'd generally say it is going to be more of the same in 2016. But, again, we have got three more months to make that call.

I would highlight and we have mentioned this before that we have a new entrant coming in, we believe, in the fourth quarter of 2016 and that's MGM in Prince Georges County in Maryland. That certainly will have an effect on our operations at Charles Town.

But as I said before, other than that, we have the arrival of the casino in San Diego with the Jamul village tribe that is going to come in before that, and we think that will probably balance each other out and mitigate to a point some of the effect of the new supply coming in to Maryland late next year.

Thanks, guys. Appreciate it.

Shaun Kelley, Bank of America.

You have covered a lot of ground, so I will try and keep it short. But Saul, in the prepared remarks about the restatement, and I appreciate that this is fairly sensitive, but you did make a comment that said you don't think that the calculation for the long-term liability will be meaningfully, I guess -- I think you used the word materially different than where people -- how people already think about it today.

I don't know if you can comment, but traditionally I think the investment community uses an eight times rent capitalization metric. Is that directionally what you are referring to on that? Or any additional color you can provide to us on that, that would probably be helpful.

Sure, you are spot on in your metric. As I have commented many times at many conferences, I'm not exactly sure where that 8 number comes from, but ironically, based on our very early preliminary back-of-the-envelope estimates -- I mean, we're only into this for a few days, it does appear that you are right, the words that I used. It doesn't look like it is going to materially vary from the calculation I described on the present value basis.

And the only other little bit of color I will give you is that we have also -- obviously, we're going to substitute depreciation and interest for rent expense, and again on a pure GAAP basis, P&L basis, those numbers are starting to look relatively close as well. So, unfortunately, that is as good as I can get to today.

Got it, that's very helpful.

And my second question, just on the operations side, is you referred I think a little bit earlier in the Q&A to the ramp-up of Tropicana, some of your initiatives and the rewards database playout. My question is, could you just talk a little bit at a high level about seasonality as it relates to Trop, because I think traditionally Q3 and Q4 particularly for an asset of this size probably aren't the biggest cash flow quarters? My guess is it is probably more seasonally geared towards Q1 and Q2, but I am curious if you could either validate that or just help us think about pure seasonality of the asset before we factor in your ramp-up and initiatives.

Sure, I would validate your comment that I think our seasonality trends at Tropicana Las Vegas will largely mirror the seasonality trends that you are accustomed to with MGM, Caesars, Steve Wynn, LBS in Las Vegas.

October has been a very strong month. I think everybody has known that, from a convention perspective. We're seeing very high occupancy and ADRs. November looks pretty good and December is always soft. Q1 will be probably the strongest quarter of year, followed by Q2, and then Q3 is where you are really soft in the summertime.

So, that's what we are seeing in the business. That's what we are seeing as we look at forward bookings into early next year, and I think you'll probably hear a lot of that from some of the larger operators on [the coast].

Thanks for that, Jay. And last question, just on that, just what is your overall group mix at the property? How much visibility do you guys have? I assume it's not huge, but you probably have a little bit?

Yes, we have about a quarter of our hotel mix is group business and/or leads from the Hilton relationship, and as we've talked about in the past, close to 50% is our wholesaler OTA and that's where we have our -- our bull's-eye is on that OTA business, and we want to displace that business with our database and hope to get our database to about a 50% mix over time, once we implement Marquee Rewards.

Perfect, thanks a lot.

Steven Kent, Goldman Sachs.

Good morning. Saul, I just wanted to ask one question, just to make sure I'm hearing this right. Will there be a delay in any filings or will your filings and financials be up to date by year-end and quarter-end on a go-forward basis?

Then the second question, could you just give me a little bit -- give us a little bit more color on the spend per visit? You allude to that a couple times in your comments. Any metrics that you could give us on spend per visit or frequency of visit I think would be helpful, even if it is anecdotal.

So I will give the first one a shot, Steve. Yes, you have -- as we said and as I said in my commentary, we are working very diligently to amend our filings. We will file as soon as we possibly can an amended Form 10-K/A for 2014 that will adjust all of the prior statements, and hopefully very shortly thereafter we will file our Form 10-Q for the third quarter, and at that point we will be all caught up and timely.

I indicated a date for completion before the due date of our 2015 10-K. I am hopeful it will be before that as well.

Jay, why don't you take Steve's second question?

Sure. With regards to the database, Steve, all of my comments at the opening are reflective of what we are seeing on a same-store basis, so I will try to recap that again.

We look at our database as high end, middle tier, and then lower worth and unrated, and what we're seeing is that from a spend per visit perspective, we are seeing year-over-year growth on a same-store basis across all of the segments, which is a very good story.

From a visitation perspective, we are seeing growth in the middle tier and the higher tier, which obviously the 20/80 rule, you definitely see more profitable customers in those segments, whereas we're seeing visitation at the lower worth and unrated segment more flat to even down in some of the more competitive markets. That's what we are seeing overall in the database.

Relative to where -- you all have been around the business for a long time, relative to where we were, let's say, prior to the recessions of 2007, 2008, that 2009 period, are we back to that kind of spend per visit that you used to see or the theoretical from your consumer?

At the high end, better; middle tier, getting close; and lower tier, no.

Okay, thank you.

David Farber, Credit Suisse.

Thanks for taking the question. I have three, most of the operational ones have already been asked. But maybe, Saul, if you wouldn't mind, I was hoping you could update us a little bit on the balance sheet, liquidity, what's available under the revolver, thoughts around cage cash, and then what's left to spend at Jamul. And then as a follow-up to that, maybe just update us on financing options since we haven't spoken to that on Jamul, and then I have one follow-up. Thanks.

So let me answer the balance-sheet question this way to say to you that the levels that we were -- that we reported at the end of June are not materially different than what they are today.

Our cash position, our availability under our credit facilities are all very comparable to the levels that they were, and the only change to that is our ongoing spend at Jamul, and I would expect that by the end of the year we will probably be in the $150 million range of spend year to date or history year to date for that property.

Status of the Jamul refinancing?

The Jamul refinancing is -- we are in process with that. We're optimistic at this point and will keep you posted with as much information as we can as it develops.

Okay, that's helpful (multiple speakers). And to the extent there is no alternative financing for Jamul, would you see other financing options or at this point you feel pretty comfortable spinning out Jamul, should you decide not to do that? And then, I have one last one. Thanks.

Sure. We have always anticipated that we would be able to obtain third-party financing for this, and what we had projected in the past and disclosed was that 50% of that would be done so in 2016 and the balance in 2017 and, frankly, we have built all of our cash needs and expectations around that model. And so, obviously, if we can be successful in getting that financing done earlier, it will only help the position that we expected and planned for anyway.

Got it, that's great. And then, maybe for Jay or even you, Saul. Can you guys just remind us, if possible, what Tropicana did in the fourth quarter last year? I believe it was a public filer. If it is, we can find it ourselves, but I didn't know if you had that offhand, and then that's it for me. Thanks.

David, this is Jay. I don't have that in front of me right now. It is public, so. It's not a lot. I can tell you that. My best guess, given as soft as fourth quarter typically is, is there was probably a loss at the property in fourth quarter of last year.

Okay, thanks, guys. Take care.

Brian Egger, Bloomberg.

Just a quick question about the Midwest corridor where you had pretty good overall -- Midwest segment, rather, where you had pretty good overall flowthrough. Can you comment specifically on the ramp-up at some of the newer properties in terms of the margin improvement in Ohio, Massachusetts, and how much of that contributed to the flowthrough in the quarter?

Sure, so there is several variables to consider in that segment. You have the continued ramp of our Ohio properties, some of which have been open for well over a year, so those year-over-year comps, we are seeing improved margins at our Columbus and Toledo properties, and then you also have the noise of Plainridge Park Casino full quarter and the same can be said for Dayton and Mahoning Valley, so there's a lot of variables in there to consider.

We are seeing our margins continue to improve in all four of our Ohio businesses, and we are continuing to make adjustments in Massachusetts and those margins will continue to improve in time as well.

Okay, thanks.

David Katz, Telsey Advisory Group.

Just a follow-up question on the Jamul refinancing. Just intuitively, when I have seen these in the past, once the property opens and is operating and it is cash flowing might seem to be a more appropriate time to refinance what you have. And would the terms be better under those circumstances, rather than doing it now? And just your updated thoughts on that would help.

David, I think if you look at recent history of tribal financing that we have moved into a two-step financing process where -- and Jamul is not unusual for what recent financing has looked like. We expect this to take place prior to opening, and then 18 to 24 months post opening, when the numbers are seasoned and subject to further estimation, a second financing will follow on typically at slightly better rates, obviously depending upon market conditions at the time. So, I think the market has shifted exactly towards the direction that we are headed.

David, we are currently loaning the tribe from our sources at Treasury plus 1,000 basis points and the banks have given the tribe, more importantly, the indication that they are willing to finance under better terms, as Saul said.

We do expect post opening that there will be another refinancing under even better terms as we start to deliver the performance of the business. So, we're optimistic, as Saul has mentioned, that we will get this accomplished over the next couple months and then look forward to the opening in the summer of 2016.

David, if you take a look at the Cowlitz transaction, you will see that is very similar to what we are doing.

Understood. Perfect. And one more question, if you don't mind. With respect to the waiver on your current bank financing, I think you indicated that you were going to seek a waiver from your bank group. Is it possible, in your view, that there could be fees associated with those waivers?

I would like to hope not, but you are right. The word possible has crossed my mind, but can't be significant.

Understood. Okay, thank you very much.

Thank you. It appears we have no further questions. Mr. Wilmott, I will turn the call back over to you, sir.

Thank you, Chris. Again, I'd like to thank everyone who listened to the earnings call and appreciate all the good questions we got from everyone, and we look forward to getting back together in the early part of 2016 to provide you with year-end results and also provide guidance for 2016 at that time. Take care, everybody.

Ladies and gentlemen, that does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your lines.