NOTE 2—ACQUISITIONS AND NEW VENTURES

Harlow's Casino Resort & Hotel Acquisition

On December 16, 2010, the Company completed its acquisition of Harlow's in Greenville, Mississippi for cash consideration of approximately $140.4 million. The transaction included the acquisition of a 33,000-square foot casino, a 105-room hotel, a 2,600-seat entertainment center and dining facilities. The primary reason for the acquisition was to continue the Company's diversification and growth strategies and invest in assets with an expected yield on investment to enhance shareholder value.

The following table summarizes the fair values of the assets acquired and liabilities assumed at the date of the acquisition.


	Total
Restricted cash	$	703
Accounts receivable		164
Prepaid expenses		696
Inventory		95
Other assets		17
Property and equipment		47,120
Deferred income taxes		118
Goodwill		31,562
Other intangible assets		59,005

Total assets acquired		139,480
Accounts payable		465
Accrued expenses		3,104
Other liabilities		62

Total liabilities acquired		3,631

Purchase price, net of cash acquired	$	135,849

The fair value of other intangible assets consists of the following (in thousands):


Slot gaming rights	$	33,880
Customer relationships		13,580
Tradename		7,980
Other intangible assets		3,565

Total intangible assets	$	59,005

Depreciation of property and equipment acquired is calculated using the straight-line method over the estimated remaining useful lives of the related assets as follows: 3 to 5 years for computer hardware and software, 5 to 10 years for equipment, 7 years for furniture and fixtures, 35 years for buildings and 22 years for building improvements. Amortization of other intangible assets acquired is calculated using the straight-line method over the estimated useful life of the related intangible asset. Intangible assets include two segments of customer relationships valued at $10.8 million and $2.8 million with lives of 6 years and 3 years, respectively. Other intangible assets consist of a non-compete agreement valued at $0.4 million and leasehold interests valued at $3.2 million, with lives of 3 years and 30 years, respectively. Slot gaming rights and tradename are determined to have indefinite lives and are not being amortized.

During the year ended December 31, 2011, the Company reduced goodwill by $0.4 million related to the resolution of the working capital calculation and to the adjustment of certain deferred income tax assets and liabilities.

YouBet.com Merger

On June 2, 2010, the Company completed its acquisition of Youbet pursuant to an Agreement and Plan of Merger dated as of November 11, 2009, for an aggregate purchase price of $131.8 million, which consisted of $45.3 million of cash and approximately 2.7 million shares of the Company's common stock valued at $86.5 million based on the closing price of the Company's common stock on June 1, 2010 of $32.04 per share. The transaction included the acquisition of the account wagering platform of Youbet and the operations of United Tote Company and United Tote Canada (collectively "United Tote"), which manufactures and operates pari-mutuel wagering systems for approximately 100 racetracks, off-track betting facilities ("OTBs") and other pari-mutuel wagering businesses. The primary reason for the acquisition was to invest in assets with an expected yield on investment and continue the Company's growth in one of the fastest growing segments of the pari-mutuel industry.

The acquisition of Youbet was accounted for under the purchase method. The following table summarizes the fair values of the assets acquired and liabilities assumed at the date of the acquisition.


	Total
Restricted cash	$	5,544
Accounts receivable		2,761
Prepaid expenses		984
Inventory		1,020
Other assets		103
Property and equipment		9,063
Deferred income taxes		31,667
Goodwill		66,801
Other intangible assets		27,300

Total assets acquired		145,243
Accounts payable		11,140
Accrued expenses		4,609
Deferred revenue		299
Income taxes payable		(941	)
Deferred income taxes		11,654

Total liabilities acquired		26,761

Purchase price, net of cash acquired	$	118,482

Depreciation of property and equipment acquired is calculated using the straight-line method over the estimated useful lives of the related assets as follows: 3 to 5 years for computer hardware and software, 5 to 10 years for equipment, 7 years for furniture and fixtures and 1 to 7 years for leasehold improvements. Amortization of other intangible assets acquired is calculated using the straight-line method over the estimated useful life of the related intangible asset. Other intangible assets primarily consist of three segments of customer relationships valued at $15.1 million, $4.6 million and $7.0 million with lives of 7 years, 6 years and 5 years, respectively. The entire balance of goodwill, which includes expected synergies from combining the operations of Youbet and the Company, has been allocated to the Online Business segment. The Company does not expect to deduct any portion of goodwill for income tax purposes. During the year ended December 31, 2011, the Company reduced goodwill by $0.4 million related to the adjustment of certain deferred income tax assets and liabilities.

During 2010 and 2011, the Company terminated approximately 64 employees. These employee separations were prompted by the identification of redundancies in the Company's Online Business as a result of the Company's merger with Youbet. During the year ended December 31, 2010, in accordance with the terms of a historic, ongoing benefit arrangement, the Company recognized $2.9 million of severance and other benefits costs related to these terminations. These expenses are included within selling, general and administrative expenses in the Consolidated Statement of Net Earnings and Comprehensive Earnings.

Pro Forma

The following table illustrates the effect on net revenues, earnings from continuing operations and earnings from continuing operations per common share as if the Company had consummated the merger with Harlow's and Youbet as of the beginning of each period presented. The pro forma results have been prepared for comparative purposes only and do not purport to be indicative of the results of operations that would have occurred had the merger with Harlow's and Youbet been consummated at the beginning of the respective periods.


	Year Ended December 31,
	2010		2009
Net revenues	$	688,440	$	638,560
Earnings from continuing operations	$	22,060	$	22,795
Earnings from continuing operations per common share
Basic:
Earnings from continuing operations	$	1.32	$	1.36
Diluted:
Earnings from continuing operations	$	1.31	$	1.36
Shares used in computing earnings from continuing operations per common share:
Basic		16,318		16,282
Diluted		16,796		16,740