Note 4. Assets Held for Sale

On February 28, 2018, the Company entered into definitive agreements to sell substantially all of the assets and liabilities of Presque Isle Downs and Vicksburg to Churchill Downs Incorporated (“CDI”). Under the terms of the agreements, CDI agreed to purchase Presque Isle Downs for cash consideration of approximately $178.9 million and Vicksburg for cash consideration of approximately $50.6 million, in each case subject to a customary working capital adjustment. In conjunction with the classification of Vicksburg’s operations as assets held for sale at March 31, 2018 as a result of the announced sale to CDI, an impairment charge totaling $9.8 million was recorded due to the carrying value exceeding the estimated net sales proceeds.

The definitive agreements provided that the dispositions were subject to receipt of required regulatory approvals, termination of the waiting period under the Hart-Scott-Rodino Act and other customary closing conditions, including, in the case of Presque Isle Downs, the prior closing of the sale of Vicksburg or the entry into an agreement to acquire another asset of the Company. On May 7, 2018, the Company and CDI each received a Request for Additional Information and Documentary Materials, often referred to as a “Second Request,” from the Federal Trade Commission in connection with its review of the Vicksburg acquisition.

On July 6, 2018, in consideration of the time and expense needed to reply to the Second Request, the Company and CDI entered into a termination agreement and release pursuant to which the parties agreed to terminate the asset purchase agreement with respect to Vicksburg and to enter into an asset purchase agreement pursuant to which CDI would acquire and assume the rights and obligations to operate Nemacolin (the “Vicksburg Termination Agreement”). The Vicksburg Termination Agreement also provided that CDI would pay the Company a $5.0 million termination fee upon execution of a definitive agreement with respect to the Nemacolin transaction. On August 10, 2018, the Company entered into a definitive agreement to sell substantially all of the assets and liabilities of Nemacolin to CDI. Under the terms of the agreement, CDI agreed to purchase Nemacolin for cash consideration of approximately $0.1 million, subject to a customary working capital adjustment.

As a result of the agreement to sell Nemacolin, an impairment charge of $3.8 million for the three and nine months ended September 30, 2018 was recorded due to the carrying of the net property and equipment being sold exceeding the estimated net sales proceeds.

Both transactions are expected to close in the fourth quarter of 2018 or first quarter of 2019, subject to satisfaction of closing conditions, including receipt of Pennsylvania regulatory approvals.

The dispositions of Nemacolin and Presque Isle Downs, both of which are reported in the East segment, met the requirements for presentation as assets held for sale under generally accepted accounting principles as of September 30, 2018. Due to the termination of the Vicksburg sale, Vicksburg is no longer presented as an asset held for sale as of September 30, 2018.

The assets and liabilities held for sale, accounted for at carrying value as it was lower than fair value, were as follows (in thousands):

	September 30, 2018
	Nemacolin		Presque Isle Downs		Total
Assets:
Accounts receivable, net	$	269	$	3,261	$	3,530
Inventories		75		1,534		1,609
Prepaid expenses and other		420		834		1,254
Property and equipment, net		1,195		69,782		70,977
Goodwill		—		3,122		3,122
Other intangibles, net		—		75,422		75,422
Assets held for sale	$	1,959	$	153,955	$	155,914

Liabilities:
Accounts payable	$	219	$	1,295	$	1,514
Accrued payroll and related		715		691		1,406
Accrued property and other taxes		325		77		402
Accrued other liabilities		1,076		3,934		5,010
Other long term liabilities		120		—		120
Long term obligation		2,416		—		2,416
Liabilities related to assets held for sale	$	4,871	$	5,997	$	10,868

The following information presents the net operating revenues and net income (loss) (in thousands):

	Three Months ended September 30, 2018					Nine Months ended September 30, 2018
	Presque Isle Downs		Nemacolin			Presque Isle Downs		Nemacolin
Net operating revenues	$	37,685	$	8,866		$	107,738	$	25,799
Net income (loss)		5,713		(2,745	)		11,909		(3,213	)

These amounts include historical operating results, adjusted to eliminate the internal allocation of interest expense that will not be assumed by the buyer. .