2. Restatement

The restatement of the Company's audited consolidated financial statements primarily results from the Company's accounting for its November 1, 2013 distribution of certain real estate assets to Gaming and Leisure Properties, Inc. ("GLPI") under the Master Lease Agreement (the "Master Lease"—see Note 3), which was previously recognized as a sale-leaseback. Upon further consideration, the Company did not meet all of the requirements for sale-leaseback accounting under Accounting Standards Codification ("ASC") 840, Leases, and therefore the transaction should be accounted for as a financing obligation rather than a distribution of assets followed by an operating lease. Specifically, the lease contains provisions that would indicate that the Company has prohibited forms of continuing involvement in the leased property such that sale-leaseback accounting would not be permitted. As a result, the Company is precluded from derecognizing the real estate assets and is instead required to recognize a financing obligation for the minimum lease payments due under the Master Lease. The restated consolidated balance sheets therefore include an adjustment to property and equipment, net for the carrying value of the real property of $2.04 billion and $2.01 billion at December 31, 2014 and 2013, respectively, and additional liabilities of $3.61 billion and $3.53 billion at December 31, 2014 and 2013, respectively, representing the present value of the future minimum lease payments due to GLPI under the Master Lease and the funded construction of certain leased real estate assets in development at the date of the Spin-Off. Consequently, the restated consolidated statements of operations no longer report rent expense for the obligations under the Master Lease, but rather include interest expense associated with the financing obligation and depreciation expense related to the real estate assets. The lease payment amounts previously recorded as rent expense were $421.4 million and $69.5 million for the years ended December 31, 2014 and 2013, respectively. The increases to interest expense and depreciation expense as a result of the correction of the accounting for the Master Lease are $379.2 million and $89.8 million, respectively, for the year ended December 31, 2014, and $62.1 million and $14.8 million, respectively, for the year ended December 31, 2013.

This change in accounting treatment also resulted in adjustments to the carrying amounts of the Company's reporting units as well as differences in the allocation of the GLPI rental obligation to the impacted reporting units, which altered each reporting unit's fair value. The resultant changes to impairment charges are described below.

As part of its restatement, the Company also identified certain other errors affecting the consolidated financial statements as of and for the years ended December 31, 2014, 2013 and 2012:


	•	The Company had originally recorded goodwill and other intangible asset impairment charges of $312.5 million and $745.9 million at October 1, 2013, the date of its annual impairment test, and November 1, 2013 (the Spin-Off date), respectively, and impairment charges of $316.5 million at October 1, 2014. The Company corrected certain errors in its goodwill and indefinite-lived gaming license intangible asset impairment analyses which incorporated the adjustments to the carrying amounts and estimated fair values of the Company's reporting units mentioned above as well as the impact of its deferred tax valuation allowance. This resulted in a decrease to the Company's previously recognized impairment charges of $161.2 million and $334.1 million for the years ended December 31, 2014 and 2013, respectively.
	•	The Company concluded that the distribution of Hollywood Casino Perryville and Hollywood Casino Baton Rouge to GLPI should be presented as discontinued operations in the consolidated statements of operations for periods prior to the Spin-Off in accordance with Accounting Standards Codification ("ASC") 205-20, Discontinued Operations. Refer to Note 23 for further details.
	•	During 2014, the Company incurred an aggregate liability of $150 million to the State of Ohio in return for the right to relocate its racing operations from Toledo, Ohio to Dayton, Ohio (Hollywood Gaming at Dayton Raceway) and from Grove City, Ohio to Austintown, Ohio (Hollywood Gaming at Mahoning Valley). The Company originally accounted for these amounts as a cost of the real estate and was therefore including them in property and equipment, net and was amortizing them over the fifteen year base lease term of the Master Lease. The Company has now concluded that these costs should have been recognized as an additional cost incurred for obtaining the gaming licenses for these two properties and capitalized as other intangible assets that are not amortized, but are considered for impairment on an annual basis or more frequently if impairment indicators exist. This resulted in a decrease to accumulated depreciation and depreciation expense of $3.6 million as of and for the year ended December 31, 2014.
	•	The Company concluded that cash totaling $240.2 million that was distributed to GLPI in connection with the Spin-Off (see Note 3) should have been classified in the 2013 consolidated statement of cash flows as a cash outflow from financing activities rather than a cash outflow from investing activities.
	•	The Company concluded that the Carlino exchange transaction should have been accounted for as a treasury stock transaction with the $10.7 million excess of the fair value of the consideration of the GLPI common stock exchanged of $39.1 million over the fair value of the treasury stock received of $28.4 million recorded as a transaction cost incurred in connection with the Spin-Off, which is included in general and administrative expenses on our restated 2013 Consolidated Statement of Operations. See Note 3 for additional information.
	•	The Company concluded that as a result of the failed spin-off-leaseback accounting treatment which resulted in a significant increase to its net deferred tax assets, a valuation allowance should be recorded on the Company's net deferred tax assets given the significant negative evidence associated with being in or expecting to be in a three year cumulative pre-tax loss position and the insufficient objectively verifiable positive evidence to support the realization of the Company's deferred tax assets. As a result, a valuation allowance of $599.9 million was recognized in connection with the Spin-Off during the year ended December 31, 2013 and an additional valuation allowance of $47.7 million and $90.3 million was recognized as a component of income tax provision (benefit) during the years ended December 31, 2014 and 2013, respectively.
	•	The Company reclassified a contingent earn-out liability from long-term debt to other non-current liabilities which totaled $19.2 million at December 31, 2014. Additionally, changes in the fair value of this liability which totaled $0.7 million for the year ended December 31, 2014 were reclassified from interest expense to general and administrative expenses.
	•	The Company corrected the classification of a corporate airplane lease that had previously been accounted for as an operating lease but upon review should have been accounted for as a capital lease. This resulted in an increase to net property and equipment of $7.0 million and $9.2 million at December 31, 2014 and 2013, respectively, as well as an increase to long term debt of $24.9 million at both December 31, 2014 and 2013. It also resulted in an increase to interest expense, with an offsetting decrease to general and administrative costs of $0.7 million for the years ended December 31, 2014, 2013, and 2012 as well as an increase to depreciation expense of $2.2 million for the years ended December 31, 2014, 2013, and 2012, respectively. This error also resulted in a reduction of the Company's retained earnings balance at December 31, 2011 of $7.9 million.
	•	The Company corrected the income tax provision and related income tax balances on the consolidated balance sheet and consolidated statements of cash flows for each of the previously identified errors.
	•	The Company corrected certain other errors that were not individually material to the consolidated financial statements.

The effect of the restatement on previously issued annual financial information as of and for the years ended December 31, 2014 and 2013 is set forth in this footnote. The effect of the restatement on the previously filed interim financial information is set forth in Note 19.

The consolidated financial statements included in this Form 10-K/A have been restated to reflect the adjustments described above. Additionally, in April 2015, the FASB issued revised guidance to simplify the presentation of debt issuance costs in the balance sheet. The revised guidance requires debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with the existing presentation of the debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by this revised guidance, and therefore there is no impact to the statement of income. The revised guidance is required to be applied on a retrospective basis, wherein the balance sheet of each individual period presented should be adjusted to reflect the period-specific effects of applying the revised guidance. The Company has elected to early adopt the revised guidance during the first quarter of 2015. As a result, the adjustments reflected in the tables below include the retrospective impact of the adoption of this accounting guidance, which resulted in a reduction of debt issuance costs and corresponding reduction of long-term debt of $25.2 million and $30.7 million at December 31, 2014 and 2013, respectively, in the restated consolidated balance sheets.

The following is a summary of the effect of the restatement and the retroactive application of revised guidance on the presentation of debt issuance costs on (i) the Company's consolidated balance sheets at December 31, 2014 and December 31, 2013 (ii) the Company's consolidated statements of operations for the years ended December 31, 2014, 2013 and 2012 and (iii) the Company's consolidated statements of cash flows for the years ended December 31, 2014, 2013 and 2012. The Company did not present a summary of the effect of the restatement on the consolidated statement of changes in shareholders' equity (deficit) for any of the above referenced periods because the impact to retained earnings on the condensed consolidated statement of changes in shareholders' equity (deficit) is reflected below in the restated balance sheets. The Company did not present a summary of the effect of the restatement on the consolidated statement of comprehensive (loss) income for any of the above referenced periods because the impact to net (loss) income is reflected below in the restated consolidated statement of operations and the restatement adjustments did not effect any other component of comprehensive (loss) income.

Penn National Gaming, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(in thousands, except share and per share data)

The following table presents the consolidated balance sheet as previously reported, restatement adjustments (including the retroactive application of revised guidance on the presentation of debt issuance costs) and the consolidated balance sheet as restated at December 31, 2014:

	As Previously Reported			Restatement Adjustments			As Restated
Assets
Current assets
Cash and cash equivalents	$	208,673		$	—		$	208,673
Receivables, net of allowance for doubtful accounts of $2,004		41,618			—			41,618
Prepaid expenses		68,947			1,838			70,785
Deferred income taxes		55,579			(15,236	)		40,343
Other current assets		11,189			—			11,189

Total current assets		386,006			(13,398	)		372,608

Property and equipment, net		769,145			1,900,587			2,669,732
Other assets
Investment in and advances to unconsolidated affiliates		179,551			—			179,551
Goodwill		277,582			596,602			874,184
Other intangible assets, net		370,562			48,891			419,453
Debt issuance costs, net of accumulated amortization of $6,796		25,151			(25,151	)		—
Deferred income taxes		79,067			(79,067	)		—
Other assets		149,366			—			149,366

Total other assets		1,081,279			541,275			1,622,554

Total assets	$	2,236,430		$	2,428,464		$	4,664,894


Liabilities
Current liabilities
Current portion of financing obligation to GLPI	$	—		$	46,884		$	46,884
Current maturities of long-term debt		30,853			—			30,853
Accounts payable		43,136			—			43,136
Accrued expenses		130,818			2,274			133,092
Accrued interest		5,163			—			5,163
Accrued salaries and wages		84,034			—			84,034
Gaming, pari-mutuel, property, and other taxes		52,132			(160	)		51,972
Insurance financing		13,680			—			13,680
Other current liabilities		75,703			70			75,773

Total current liabilities		435,519			49,068			484,587

Long-term liabilities
Long-term financing obligation to GLPI, net of current portion		—			3,564,629			3,564,629
Long-term debt, net of current maturities and debt issuance costs		1,229,979			(19,402	)		1,210,577
Deferred income taxes		—			78,633			78,633
Noncurrent tax liabilities		8,188			(1,153	)		7,035
Other noncurrent liabilities		8,258			19,189			27,447

Total long-term liabilities		1,246,425			3,641,896			4,888,321

Shareholders' equity (deficit)
Series B Preferred stock ($.01 par value, 1,000,000 shares authorized, 0 shares issued and outstanding at December 31, 2014)		—			—			—
Series C Preferred stock ($.01 par value, 18,500 shares authorized, 8,624 shares issued and outstanding at December 31, 2014)		—			—			—
Common stock ($.01 par value, 200,000,000 shares authorized, 81,329,210 shares issued and 79,161,817 shares outstanding, at December 31, 2014)		786			27			813
Treasury stock, at cost (2,167,393 shares held at December 31, 2014)		—			(28,414	)		(28,414	)
Additional paid-in capital		918,370			37,776			956,146
Retained deficit		(363,388	)		(1,271,889	)		(1,635,277	)
Accumulated other comprehensive (loss) income		(1,282	)		—			(1,282	)

Total shareholders' equity (deficit)		554,486			(1,262,500	)		(708,014	)

Total liabilities and shareholders' equity (deficit)	$	2,236,430		$	2,428,464		$	4,664,894

Penn National Gaming, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(in thousands, except share and per share data)

	As Previously Reported			Restatement Adjustments			As Restated
Assets
Current assets
Cash and cash equivalents	$	292,995					$	292,995
Receivables, net of allowance for doubtful accounts of $2,752		52,538						52,538
Prepaid expenses		62,724			(9,579	)		53,145
Deferred income taxes		71,093			(29,679	)		41,414
Other current assets		29,511			10			29,521

Total current assets		508,861			(39,248	)		469,613

Property and equipment, net		497,457			2,019,423			2,516,880
Other assets
Investment in and advances to unconsolidated affiliates		193,331						193,331
Goodwill		492,398			459,555			951,953
Other intangible assets, net		359,648			(125,390	)		234,258
Debt issuance costs, net of accumulated amortization of $922		30,734			(30,734	)		—
Other assets		101,562			(10	)		101,552

Total other assets		1,177,673			303,421			1,481,094

Total assets	$	2,183,991		$	2,283,596		$	4,467,587


Liabilities
Current liabilities
Current portion of financing obligation to GLPI	$	—		$	42,016		$	42,016
Current maturities of long-term debt		27,598						27,598
Accounts payable		22,580						22,580
Accrued expenses		98,009			4,595			102,604
Accrued interest		5,027						5,027
Accrued salaries and wages		86,498			66			86,564
Gaming, pari-mutuel, property, and other taxes		52,053			(37	)		52,016
Insurance financing		3,020						3,020
Other current liabilities		66,684			340			67,024

Total current liabilities		361,469			46,980			408,449

Long-term liabilities
Long-term financing obligation to GLPI, net of current portion		—			3,492,793			3,492,793
Long-term debt, net of current maturities and debt issuance costs		1,023,194			(5,797	)		1,017,397
Deferred income taxes		13,912			57,240			71,152
Noncurrent tax liabilities		19,966			1,598			21,564
Other noncurrent liabilities		7,050			34			7,084

Total long-term liabilities		1,064,122			3,545,868			4,609,990

Shareholders' equity (deficit)
Series B Preferred stock ($.01 par value, 1,000,000 shares authorized, 0 shares issued and outstanding at December 31, 2013)		—						—
Series C Preferred stock ($.01 par value, 18,500 shares authorized, 8,624 shares issued and outstanding at December 31, 2013)		—						—
Common stock ($.01 par value, 200,000,000 shares authorized, 79,955,786 shares issued and 77,788,393 shares outstanding, at December 31, 2013)		775			24			799
Treasury stock, at cost (2,167,393 shares held at December 31, 2013)		—			(28,414	)		(28,414	)
Additional paid-in capital		887,556			37,779			925,335
Retained deficit		(130,314	)		(1,318,641	)		(1,448,955	)
Accumulated other comprehensive (loss) income		383						383

Total shareholders' equity (deficit)		758,400			(1,309,252	)		(550,852	)

Total liabilities and shareholders' equity (deficit)	$	2,183,991		$	2,283,596		$	4,467,587

Penn National Gaming, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(in thousands, per share data)

The following table presents the consolidated statement of operations as previously reported, restatement adjustments and the consolidated statement of operations as restated for the year ended December 31, 2014:

	As Previously Reported			Restatement Adjustments			As Restated
Revenues
Gaming	$	2,297,175		$	—		$	2,297,175
Food, beverage and other		432,021			—			432,021
Management service fee		11,650			—			11,650

Revenues		2,740,846			—			2,740,846
Less promotional allowances		(150,319	)		—			(150,319	)

Net revenues		2,590,527			—			2,590,527

Operating expenses
Gaming expense		1,148,968			(2,809	)		1,146,159
Food, beverage and other		319,792			—			319,792
General and administrative		446,405			31			446,436
Rental expense related to Master Lease		421,388			(421,388	)		—
Depreciation and amortization		178,981			87,761			266,742
Impairment losses		321,089			(161,205	)		159,884
Insurance recoveries, net of deductible charges		(5,674	)		—			(5,674	)

Total operating expenses		2,830,949			(497,610	)		2,333,339

(Loss) income from operations		(240,422	)		497,610			257,188

Other income (expenses)
Interest expense		(45,982	)		(379,132	)		(425,114	)
Interest income		3,730			—			3,730
Income from unconsolidated affiliates		7,949			—			7,949
Loss on early extinguishment of debt		—			—			—
Other		2,944			—			2,944

Total other expenses		(31,359	)		(379,132	)		(410,491	)

(Loss) income from operations before income taxes		(271,781	)		118,478			(153,303	)
Income tax (benefit) provision		(38,586	)		69,105			30,519

Net (loss) income	$	(233,195	)	$	49,373		$	(183,822	)


(Loss) earnings per common share:
Basic (loss) earnings per common share	$	(2.97	)	$	0.63		$	(2.34	)
Diluted (loss) earnings per common share	$	(2.97	)	$	0.63		$	(2.34	)

Penn National Gaming, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(in thousands, except per share data)

The following table presents the consolidated statement of operations as previously reported, adjustments to properly present discontinued operations, other restatement adjustments and the consolidated statement of operations as restated for the year ended December 31, 2013:

	As Previously Reported			Discontinued Operations			Restatement Adjustments			As Restated
Revenues
Gaming	$	2,615,169		$	(135,568	)	$	—		$	2,479,601
Food, beverage and other		461,048			(10,480	)		—			450,568
Management service fee		13,176						—			13,176

Revenues		3,089,393			(146,048	)		—			2,943,345
Less promotional allowances		(170,639	)		5,180			—			(165,459	)

Net revenues		2,918,754			(140,868	)		—			2,777,886

Operating expenses
Gaming expense		1,318,546			(76,031	)		5,000			1,247,515
Food, beverage and other		345,345			(9,066	)		—			336,279
General and administrative		526,482			(20,367	)		10,028			516,143
Rental expense related to Master Lease		69,502			—			(69,502	)		—
Depreciation and amortization		298,326			(11,892	)		16,970			303,404
Impairment losses		1,132,417			—			(334,112	)		798,305
Insurance recoveries, net of deductible charges		108			—			—			108

Total operating expenses		3,690,726			(117,356	)		(371,616	)		3,201,754

(Loss) from operations		(771,972	)		(23,512	)		371,616			(423,868	)

Other income (expenses)
Interest expense		(97,092	)		—			(62,805	)		(159,897	)
Interest income		1,387			—			—			1,387
Income from unconsolidated affiliates		9,657			—			—			9,657
Loss on early extinguishment of debt		(61,660	)		—			—			(61,660	)
Other		3,803			4,201			—			8,004

Total other expenses		(143,905	)		4,201			(62,805	)		(202,509	)

(Loss) from continuing operations before income taxes		(915,877	)		(19,311	)		308,811			(626,377	)
Income tax (benefit)		(121,538	)		(7,766	)		95,724			(33,580	)

Net (loss) from continuing operations		(794,339	)		(11,545	)		213,087			(592,797	)

Income from discontinued operations, net of tax		—			11,545			—			11,545

Net (loss) income	$	(794,339	)	$	—		$	213,087		$	(581,252	)


Basis (loss) earnings per share—continuing operations	$	(10.17	)	$	(0.15	)	$	2.73		$	(7.59	)
Basis earnings per share—discontinued operations	$	—		$	0.15		$	—		$	0.15

Basic (loss) earnings per share	$	(10.17	)	$	—		$	2.73		$	(7.44	)

Diluted (loss) earnings per share—continuing operations	$	(10.17	)	$	(0.15	)	$	2.73		$	(7.59	)
Diluted earnings per share—discontinued operations	$	—		$	0.15		$	—		$	0.15

Diluted (loss) earnings per share	$	(10.17	)	$	—		$	2.73		$	(7.44	)

Penn National Gaming, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(in thousands, except per share data)

	As Previously Reported			Discontinued Operations			Restatement Adjustments			As Restated
Revenues
Gaming	$	2,590,533		$	(202,581	)	$	—		$	2,387,952
Food, beverage and other		438,837			(15,635	)		—			423,202
Management service fee		14,835						—			14,835

Revenues		3,044,205			(218,216	)		—			2,825,989
Less promotional allowances		(144,740	)		7,573						(137,167	)

Net revenues		2,899,465			(210,643	)		—			2,688,822

Operating expenses
Gaming expense		1,342,905			(113,111	)		—			1,229,794
Food, beverage and other		343,611			(13,114	)		—			330,497
General and administrative		532,241			(26,660	)		(684	)		504,897
Rental expense related to Master Lease		—			—			—			—
Depreciation and amortization		245,348			(14,090	)		2,149			233,407
Impairment losses		—			—			—			—
Insurance recoveries, net of deductible charges		(7,229	)		—			—			(7,229	)

Total operating expenses		2,456,876			(166,975	)		1,465			2,291,366

Income from operations		442,589			(43,668	)		(1,465	)		397,456

Other income (expenses)
Interest expense		(81,440	)		—			(684	)		(82,124	)
Interest income		948			(2	)		—			946
Income from unconsolidated affiliates		3,804			—			—			3,804
Loss on early extinguishment of debt		—			—			—			—
Other		(1,375	)		6,320			—			4,945

Total other expenses		(78,063	)		6,318			(684	)		(72,429	)

Income from continuing operations before income taxes		364,526			(37,350	)		(2,149	)		325,027
Income tax provision		152,555			(14,431	)		(675	)		137,449

Net income from continuing operations		211,971			(22,919	)		(1,474	)		187,578

Income from discontinued operations, net of tax		—			22,919			—			22,919

Net income	$	211,971		$	—		$	(1,474	)	$	210,497


Basis earnings per share—continuing operations	$	2.24		$	(0.24	)	$	(0.02	)	$	1.98
Basis earnings per share—discontinued operations	$	—		$	0.24		$	—		$	0.24

Basic earnings per share	$	2.24		$	—		$	(0.02	)	$	2.22

Diluted earnings per share—continuing operations	$	2.04		$	(0.22	)	$	(0.01	)	$	1.81
Diluted earnings per share—discontinued operations	$	—		$	0.22		$	—		$	0.22

Diluted earnings per share	$	2.04		$	—		$	(0.01	)	$	2.03

Penn National Gaming, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(in thousands)

The following table presents the consolidated statement of cash flows as previously reported, restatement adjustments and the consolidated statement of cash flows as restated for the year ended December 31, 2014:

	As Previously Reported			Restatement Adjustments			As Restated
Year Ended December 31, 2014:
Operating activities
Net (loss) income	$	(233,195	)	$	49,373		$	(183,822	)
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization		178,981			87,761			266,742
Amortization of items charged to interest expense		6,040			—			6,040
Accretion of settlement value other non-current liabilities		689			—			689
Loss on sale of fixed assets		738			—			738
Income from unconsolidated affiliates		(7,949	)		—			(7,949	)
Distributions of earnings from unconsolidated affiliates		23,000			—			23,000
Deferred income taxes		(72,278	)		75,186			2,908
Charge for stock-based compensation		10,666			—			10,666
Impairment losses and write downs		324,389			(161,205	)		163,184
Decrease (increase), net of businesses acquired
Accounts receivable		10,046			—			10,046
Prepaid expenses and other current assets		(13,315	)		10			(13,305	)
Other assets		150			(9	)		141
Increase (decrease), net of businesses acquired
Accounts payable		2,028			—			2,028
Accrued expenses		(17,191	)		(2,321	)		(19,512	)
Accrued interest		136			—			136
Accrued salaries and wages		(2,464	)		(66	)		(2,530	)
Gaming, pari-mutuel, property and other taxes		79			(123	)		(44	)
Income taxes		8,522			(3,329	)		5,193
Other current and noncurrent liabilities		10,227			(304	)		9,923
Other noncurrent tax liabilities		(9,298	)		(2,751	)		(12,049	)

Net cash provided by operating activities		220,001			42,222			262,223

Investing activities
Capital project expenditures, net of reimbursements		(144,707	)		—			(144,707	)
Capital maintenance expenditures		(83,438	)		—			(83,438	)
Advances to Jamul Tribe		(47,093	)		—			(47,093	)
Proceeds from sale of property and equipment		1,665			—			1,665
Investment in joint ventures		(1,285	)		—			(1,285	)
Decrease in cash in escrow		18,000			—			18,000
Acquisitions of businesses and gaming and other licenses, net of cash acquired		(118,678	)		—			(118,678	)

Net cash used in investing activities		(375,536	)		—			(375,536	)

Financing activities
Proceeds from exercise of options		9,799			—			9,799
Principal payments on financing obligation with GLPI		—			(42,222	)		(42,222	)
Proceeds from issuance of long-term debt, net of issuance costs		104,935			—			104,935
Principal payments on long-term debt		(49,541	)		—			(49,541	)
Payments of other long-term obligations		(15,000	)		—			(15,000	)
Proceeds from insurance financing		28,888			—			28,888
Payments on insurance financing		(18,228	)		—			(18,228	)
Tax benefit from stock options exercised		10,360			—			10,360

Net cash provided by (used in) financing activities		71,213			(42,222	)		28,991

Net decrease in cash and cash equivalents		(84,322	)		—			(84,322	)
Cash and cash equivalents at beginning of year		292,995			—			292,995

Cash and cash equivalents at end of year	$	208,673		$	—		$	208,673


Supplemental disclosure
Interest expense paid, net of amounts capitalized	$	39,101		$	379,443		$	418,544
Income taxes paid	$	23,185		$	—		$	23,185

Penn National Gaming, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(in thousands)

	As Previously Reported			Restatement Adjustments			As Restated
Year Ended December 31, 2013:
Operating activities
Net (loss) income	$	(794,339	)	$	213,087		$	(581,252	)
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization		298,326			16,971			315,297
Amortization of items charged to interest expense		8,112			—			8,112
Accretion of settlement values on long term obligations		5,024			—			5,024
Transaction cost for Carlino exchange		—			10,695			10,695
Loss on sale of fixed assets		3,652			—			3,652
Income from unconsolidated affiliates		(9,657	)		—			(9,657	)
Distributions of earnings from unconsolidated affiliates		21,500			—			21,500
Loss on early extinguishment of debt		26,782			—			26,782
Deferred income taxes		(224,983	)		87,587			(137,396	)
Charge for stock-based compensation		22,809			—			22,809
Impairment losses		1,132,417			(334,112	)		798,305
Gain on investment in corporate debt securities		(1,516	)		—			(1,516	)
Gain on sale of Bullwhackers		(444	)		—			(444	)
Decrease (increase), net of businesses acquired
Accounts receivable		5,034			—			5,034
Prepaid expenses and other current assets		912			(126	)		786
Other assets		(42,567	)		5,611			(36,956	)
(Decrease) increase, net of businesses acquired
Accounts payable		(2,175	)		—			(2,175	)
Accrued expenses		(30,147	)		4,596			(25,551	)
Accrued interest		(15,030	)		—			(15,030	)
Accrued salaries and wages		(2,383	)		66			(2,317	)
Gaming, pari-mutuel, property and other taxes		(1,555	)		(37	)		(1,592	)
Income taxes		29,058			6,655			35,713
Other current and noncurrent liabilities		10,576			374			10,950
Other noncurrent tax liabilities		1,396			1,598			2,994

Net cash provided by operating activities		440,802			12,965			453,767

Investing activities
Capital project expenditures, net of reimbursements		(119,051	)		—			(119,051	)
Capital maintenance expenditures		(80,862	)		—			(80,862	)
Advances to Jamul Tribe		—			(5,602	)		(5,602	)
Proceeds from sale of property and equipment		3,837			—			3,837
Proceeds from investment in corporate debt securities		6,870			—			6,870
Proceeds related to damaged property and equipment		2,203			—			2,203
Proceeds from sale of Bullwhackers, net of cash on hand		4,996			—			4,996
Investment in joint ventures		(675	)		—			(675	)
Cash contributed to GLPI in connection with Spin-Off		(240,202	)		240,202			—
Decrease in cash in escrow		8,000			—			8,000
Acquisitions of businesses and gaming licenses		(73	)		—			(73	)

Net cash (used in) provided by investing activities		(414,957	)		234,600			(180,357	)

Financing activities
Proceeds from exercise of options		51,535			—			51,535
Repurchase of preferred stock		(649,518	)		—			(649,518	)
Cash contributed to GLPI in connection with Spin-Off		—			(240,202	)		(240,202	)
Principal payments on financing obligation with GLPI		—			(7,363	)		(7,363	)
Proceeds from issuance of long-term debt, net of issuance costs		4,745,790			—			4,745,790
Principal payments on long-term debt		(4,135,059	)		—			(4,135,059	)
Payments of other long-term obligations		(16,000	)		—			(16,000	)
Proceeds from insurance financing		19,233			—			19,233
Payments on insurance financing		(20,069	)		—			(20,069	)
Tax benefit from stock options exercised		10,771			—			10,771

Net cash provided by (used in) financing activities		6,683			(247,565	)		(240,882	)

Net increase in cash and cash equivalents		32,528			—			32,528
Cash and cash equivalents at beginning of year		260,467			—			260,467

Cash and cash equivalents at end of year	$	292,995		$	—		$	292,995


Supplemental disclosure
Interest expense paid, net of amounts capitalized	$	104,351		$	62,806		$	167,157
Income taxes paid	$	69,758		$	—		$	69,758

Penn National Gaming, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(in thousands)

	As Previously Reported			Restatement Adjustments			As Restated
Operating activities
Net (loss) income	$	211,971		$	(1,474	)	$	210,497
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization		245,348			2,149			247,497
Amortization of items charged to interest expense		6,898			—			6,898
Loss (gain) on sale of fixed assets		(1,690	)		—			(1,690	)
Income from unconsolidated affiliates		(3,804	)		—			(3,804	)
Distributions of earnings from unconsolidated affiliates		9,400			—			9,400
Deferred income taxes		44,983			(594	)		44,389
Charge for stock-based compensation		28,609			—			28,609
Decrease (increase), net of businesses acquired
Accounts receivable		1,887			—			1,887
Insurance receivable		1,072			—			1,072
Prepaid expenses and other current assets		14,445			—			14,445
Other assets		(12,331	)		—			(12,331	)
Increase (decrease), net of businesses acquired
Accounts payable		1,334			—			1,334
Accrued expenses		12,770			—			12,770
Accrued interest		3,925			—			3,925
Accrued salaries and wages		10,285			—			10,285
Gaming, pari-mutuel, property and other taxes		6,051			—			6,051
Income taxes		(70,721	)		(81	)		(70,802	)
Other current and noncurrent liabilities		12,903			—			12,903
Other noncurrent tax liabilities		(16,146	)		—			(16,146	)

Net cash provided by operating activities		507,189			—			507,189

Investing activities
Capital project expenditures, net of reimbursements		(386,344	)		—			(386,344	)
Capital maintenance expenditures		(86,641	)		—			(86,641	)
Proceeds from sale of property and equipment		5,323			—			5,323
Investment in joint ventures		(36,000	)		—			(36,000	)
Decrease in cash in escrow		24,625			—			24,625
Acquisitions of businesses and gaming and other licenses, net of cash acquired		(709,450	)		—			(709,450	)

Net cash used in investing activities		(1,188,487	)		—			(1,188,487	)

Financing activities
Proceeds from exercise of options		31,933			—			31,933
Proceeds from issuance of long-term debt, net of issuance costs		1,162,709			—			1,162,709
Principal payments on long-term debt		(494,891	)		—			(494,891	)
Proceeds from other long-term obligations		10,000			—			10,000
Proceeds from insurance financing		4,746			—			4,746
Payments on insurance financing		(17,253	)		—			(17,253	)
Tax benefit from stock options exercised		6,081			—			6,081

Net cash provided by financing activities		703,325			—			703,325

Net (decrease) increase in cash and cash equivalents		22,027			—			22,027
Cash and cash equivalents at beginning of year		238,440			—			238,440

Cash and cash equivalents at end of year	$	260,467		$	—		$	260,467


Supplemental disclosure
Interest expense paid, net of amounts capitalized	$	70,239		$	684		$	70,923
Income taxes paid	$	187,515		$	—		$	187,515