Goodwill and Intangibles

9 Months Ended

Sep. 30, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND INTANGIBLES

There were no accumulated impairments of goodwill as of September 30, 2015. Changes in the carrying amount of goodwill are as follows (in thousands):



	Gross Carrying Amount
Balance at December 31, 2014	$	77,617
Acquisition - Cadillac Jack	178,419
Acquisition - AGSi	4,894
Acquisition - Intellectual Property	2,600
Foreign currency adjustments	(1,688		)
Other	(436		)
Balance at September 30, 2015	$	261,406

Intangible assets consist of the following (in thousands):



		September 30, 2015							December 31, 2014
	Useful Life (years)	Gross Value		Accumulated Amortization			Net Carrying Value		Gross Value		Accumulated Amortization			Net Carrying Value
Indefinite lived trade names	Indefinite	$	12,126	$	—		$	12,126	$	12,126	$	—		$	12,126
Trade and brand names	7	14,409		(1,189		)	13,220		809		(119		)	690
Customer relationships	7	170,293		(20,667		)	149,626		65,159		(9,313		)	55,846
Contract rights under development and placement fees	1 - 7	2,717		(367		)	2,350		678		(58		)	620
Gaming software and technology platforms	1 - 5	117,456		(18,372		)	99,084		32,564		(7,108		)	25,456
Intellectual property	10 - 20	13,950		(595		)	13,355		7,279		(132		)	7,147
		$	330,951	$	(41,190	)	$	289,761	$	118,615	$	(16,730	)	$	101,885

Intangible assets are amortized over their respective estimated useful lives ranging from one to twenty years. Amortization expense related to intangible assets was $13.2 million and $4.3 million for the three months ended September 30, 2015 and 2014, respectively, and $24.9 million and $12.2 million for the nine months ended September 30, 2015 and 2014, respectively.

The Company enters into development agreements and placement fee agreements with certain customers to secure floor space under lease agreements for its gaming machines. Amounts paid in connection with the development agreements are repaid to the Company in accordance with the terms of the agreement, whereas placements fees are not reimbursed. For development agreements in the form of a loan, interest income is recognized on the repayment of the notes based on the stated rate or, if not stated explicitly in the development agreement, on an imputed interest rate. If the stated interest rate is deemed to be other than a market rate or zero, a discount is recorded on the note receivable as a result of the difference between the stated and market rate and a corresponding intangible asset is recorded. The intangible asset is recognized in the financial statements as a contract right under development agreement and amortized as a reduction in revenue over the term of the agreement. Placement fees can be in the form of cash paid upfront or free lease periods and are accreted over the life of the contract and the expense is recorded as a reduction of revenue. We recorded a reduction of gaming operations revenue from the accretion of contract rights under development agreements and placement fees of $0.2 million and $0.3 million for the three and nine months ended September 30, 2015, respectively. The amounts amortized in 2014 were nominal.

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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