Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Other Intangible Assets:

Goodwill and other indefinite-lived intangible assets, including trade names are reviewed for impairment annually, or more frequently if indicators of impairment exist. During the second quarter of 2022, we concluded the useful life of the trade name, California's Great America, was no longer indefinite due to the then-anticipated sale of the land and the eventual disposal of the remaining assets; see Note 4. As a result, we tested the California's Great America trade name totaling $0.7 million for impairment during the second quarter of 2022 resulting in no impairment charge. The fair value of the trade name was calculated using a relief-from-royalty model. We are amortizing the trade name over an approximate 5.5-year period, or through December 31, 2027. We concluded no other indicators of impairment existed during 2022 and 2021, respectively. We based our conclusions on our financial performance projections, as well as an updated analysis of macroeconomic and industry-specific conditions. We performed our annual impairment test as of the first days of the fourth quarter in 2022 and 2021, respectively, and concluded there was no further impairment of the carrying value of goodwill or other indefinite-lived intangible assets in either period.

As of our 2022 annual impairment test on September 26, 2022, the Schlitterbahn Waterpark & Resort New Braunfels and the Schlitterbahn Waterpark Galveston ("Schlitterbahn") reporting unit's fair value exceeded its carrying value by less than 10%. The fair value of the Schlitterbahn parks reporting unit was impacted by a slower than expected near-term recovery of attendance following the COVID-19 pandemic, increased projected capital expenditures, and an increase in the weighted average cost of capital. If future operating results do not meet expectations, the goodwill assigned to the Schlitterbahn reporting unit may become impaired. The goodwill assigned to the Schlitterbahn reporting unit totaled $93.1 million as of December 31, 2022. The fair values of all other reporting units with goodwill exceeded their respective carrying values by a substantial margin.

During the first and third quarters of 2020 and due to the negative effects of the COVID-19 pandemic on our forecasted operating results, we tested our goodwill and indefinite-lived intangible assets for impairment. We concluded the estimated fair value of goodwill at the Schlitterbahn parks and Dorney Park reporting units, and the estimated fair value of the Schlitterbahn trade name no longer exceeded their carrying values. Therefore, we recorded a $73.6 million, $6.8 million and $7.9 million impairment of goodwill at the Schlitterbahn parks, goodwill at Dorney Park, and the Schlitterbahn trade name, respectively, during the first quarter of 2020. We also recorded an $11.3 million, $2.3 million and $2.2 million impairment of goodwill at the Schlitterbahn parks, goodwill at Dorney Park, and the Schlitterbahn trade name, respectively, during the third quarter of 2020. The impairment charges were equal to the amount by which the carrying amounts exceeded the assets' fair value and were recorded in "Loss on impairment of goodwill and other intangibles" within the consolidated statement of operations and comprehensive loss.

The fair value of our reporting units is established using a combination of an income (discounted cash flow) approach and market approach. The income approach uses each reporting unit's projection of estimated operating results and discounted cash flows using a weighted-average cost of capital that reflects current market conditions. Estimated operating results are established using our best estimates of economic and market conditions over the projected period including growth rates in revenues and costs, estimates of future expected changes in operating margins and cash expenditures. Other significant estimates and assumptions include terminal value growth rates, future estimates of capital expenditures and changes in future working capital requirements. The market approach estimates fair value by applying cash flow multiples to each reporting unit's operating performance. The multiples are derived from comparable publicly traded companies with similar operating and investment characteristics of the reporting units. The impairment charges recognized are for the amount by which the reporting unit's carrying amount exceeds its fair value.

Our indefinite-lived intangible assets consist of trade names. The fair value of our trade names is calculated using a relief-from-royalty model. The impairment charges recognized are for the amount by which the trade name's carrying amount exceeds its fair value.

Management makes significant estimates calculating the fair value of our reporting units and trade names. Actual results could materially differ from these estimates.

Changes in the carrying value of goodwill for the years ended December 31, 2022 and December 31, 2021 were:


(In thousands)	Goodwill
Balance as of December 31, 2020	$	266,961

Foreign currency exchange translation	271
Balance as of December 31, 2021	$	267,232

Foreign currency exchange translation	(4,026)
Balance as of December 31, 2022	$	263,206

As of December 31, 2022 and December 31, 2021, other intangible assets consisted of the following:


(In thousands)	Weighted Average Amortization Period	Gross Carrying Amount		Accumulated Amortization		Net Carrying Value
December 31, 2022
Other intangible assets:
Trade names (1)	5.5 years	$	48,619	$	(63)	$	48,556
License / franchise agreements	13.0 years	4,293		(3,899)		394
Total other intangible assets		$	52,912	$	(3,962)	$	48,950

December 31, 2021
Other intangible assets:
Trade names	—	$	49,515	$	—	$	49,515
License / franchise agreements	12.0 years	4,262		(3,783)		479
Total other intangible assets		$	53,777	$	(3,783)	$	49,994

(1) The weighted average amortization period represents the California's Great America trade name. Our other trade names are indefinite-lived.

Amortization expense of finite-lived other intangible assets for 2022, 2021 and 2020 was immaterial and is expected to be immaterial going forward.