Isle Acquisition and Preliminary Purchase Price Accounting (Tables)

6 Months Ended

Jun. 30, 2017

Schedule of Purchase Consideration Calculation

Purchase consideration calculation (dollars in thousands, except shares and stock price)	Shares		Per share
Cash paid for outstanding Isle common stock (1)					$	552,050
Shares of ERI common stock issued for Isle common stock (2)		28,468,182	$	19.12		544,312
Cash paid by ERI to retire Isle's long-term debt (3)						828,000
Shares of ERI common stock for Isle equity awards (4)						10,383
Purchase consideration					$	1,934,745

(1)

The cash component of the consideration represents 58% of the aggregate consideration paid in the Isle Merger. The Merger Agreement provided that Isle stockholders could elect to exchange each share of Isle common stock for either $23.00 in cash or 1.638 shares of ERI common stock, subject to proration such that the outstanding shares of Isle common stock will be exchanged for aggregate consideration comprised of 58% cash and 42% ERI common stock. See discussion of Stock Consideration component in note (2) below.

(2)

The Stock Consideration component of the consideration represents 42% of the aggregate consideration paid in the Isle Merger. The Merger Agreement provided that 58% of the aggregate consideration would be paid by ERI in cash, as described in note (1) above. The remaining 42% of the aggregate consideration was paid in shares of ERI common stock. The total Stock Consideration and per share consideration above were based on the ERI stock price on April 28, 2017 (the last business day prior to Isle Acquisition Date) which was $19.12 per share.

(3)	In addition to the cash paid to retire the principal amounts outstanding of Isle’s long-term debt, ERI paid $26.6 million in premiums and interest.

(4)

This amount represents consideration paid for the replacement of Isle’s outstanding equity awards. As discussed in Note 1, Isle’s outstanding equity awards were replaced by ERI equity awards with similar terms. A portion of the fair value of ERI awards issued represents consideration transferred, while a portion represents compensation expense based on the vesting terms of the equity awards.

Summary of the Preliminary Accounting of the Purchase Consideration to the Identifiable Assets Acquired and Liabilities Assumed

The following table summarizes the preliminary accounting of the estimated purchase consideration to the identifiable assets acquired and liabilities assumed in the Isle Acquisition as of the Isle Acquisition Date, with the excess recorded as goodwill. The fair values were based on management’s analysis, including preliminary work performed by third-party valuation specialists. The following table summarizes the preliminary purchase price accounting of the acquired assets and liabilities as of June 30, 2017 (dollars in thousands):

Current and other assets, net	$	134,143
Property and equipment		853,331
Goodwill		679,656
Intangible assets (i)		470,811
Other noncurrent assets		11,025
Assets held for sale		143,592
Total assets		2,292,558
Current liabilities		(138,475	)
Deferred income taxes (ii)		(187,127	)
Other noncurrent liabilities		(26,762	)
Liabilities related to assets held for sale		(5,449	)
Total liabilities		(357,813	)
Net assets acquired	$	1,934,745

(i)	Intangible assets consist of gaming licenses, trade names, and player relationships.

(ii)	Deferred tax liabilities were derived based on fair value adjustments for property and equipment and identified intangibles.

Schedule of Unaudited Pro Forma Information

The following unaudited pro forma information presents the results of operations of the Company for the six months ended June 30, 2017 and 2016, which give effect to the Isle Acquisition, the Lake Charles Disposition, and Isle’s sale of the Lady Luck Casino Marquette, which closed on March 13, 2017, as if each of such transactions had occurred on January 1, 2016 (in thousands):

	Six Months Ended
	June 30, 2017		June 30, 2016
Net revenues	$	847,124	$	877,058
Net income (loss) from continuing operations		48,018		(14,084	)
Net income (loss)		52,972		(8,854	)