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Goodwill and Other Intangible Assets
9 Months Ended
Sep. 30, 2011
Goodwill and Other Intangible Assets 
Goodwill and Other Intangible Assets

7.  Goodwill and Other Intangible Assets

 

In accordance with ASC 350, “Intangibles-Goodwill and Other,” the Company does not amortize goodwill, rather it is tested annually, or more frequently if indicators of impairment exist, for impairment by comparing the fair value of the reporting units to their carrying amount.  If the carrying amount of a reporting unit exceeds its fair value in step 1 of the impairment test, then step 2 of the impairment test is performed to determine the implied value of goodwill for that reporting unit.  If the implied value of goodwill is less than the goodwill allocated for that reporting unit, an impairment loss is recognized.  Additionally, the Company considers its gaming licenses, racing permits and the majority of its trademark intangible assets as indefinite-life intangible assets that do not require amortization based on the Company’s future expectations to operate its gaming facilities indefinitely as well as the Company’s historical experience in renewing these intangible assets at minimal cost with various state gaming and racing commissions.

 

A reconciliation of goodwill and accumulated goodwill impairment losses is as follows (in thousands):

 

Balance at December 31, 2010:

 

 

 

Goodwill

 

$

2,019,613

 

Accumulated goodwill impairment losses

 

(833,857

)

Goodwill, net

 

$

1,185,756

 

Other

 

(4,048

)

Balance at September 30, 2011:

 

 

 

Goodwill

 

$

2,015,565

 

Accumulated goodwill impairment losses

 

(833,857

)

Goodwill, net

 

$

1,181,708

 

 

The table below presents the gross carrying value, accumulated amortization, and net book value of each major class of intangible asset at September 30, 2011 and December 31, 2010:

 

 

 

September 30, 2011

 

December 31, 2010

 

 

 

(in thousands)

 

 

 

Gross
Carrying
Value

 

Accumulated
Amortization

 

Net Book
Value

 

Gross
Carrying
Value

 

Accumulated
Amortization

 

Net Book
Value

 

Indefinite-life intangible assets

 

$

420,550

 

$

 

$

420,550

 

$

412,686

 

$

 

$

412,686

 

Other intangible assets

 

49,667

 

49,100

 

567

 

49,600

 

47,134

 

2,466

 

Total

 

$

470,217

 

$

49,100

 

$

421,117

 

$

462,286

 

$

47,134

 

$

415,152

 

 

The Company’s intangible asset amortization expense was $0.4 million and $2.0 million for the three and nine months ended September 30, 2011, respectively, as compared to $1.6 million and $5.0 million for the three and nine months ended September 30, 2010, respectively.

 

The following table presents expected intangible asset amortization expense based on existing intangible assets at September 30, 2011 (in thousands):

 

Remainder of 2011

 

$

175

 

2012

 

245

 

2013

 

46

 

2014

 

46

 

2015

 

27

 

Thereafter

 

28

 

Total

 

$

567

 

 

The Company’s remaining goodwill and other intangible assets by reporting unit at September 30, 2011 is shown below (in thousands):

 

Reporting Unit

 

Remaining Goodwill and
other intangible assets
at September 30, 2011

 

Hollywood Casino Lawrenceburg

 

$

362,491

 

Hollywood Casino Joliet

 

211,508

 

Hollywood Casino Aurora

 

207,207

 

Argosy Casino Riverside

 

159,296

 

Black Gold Casino at Zia Park

 

145,937

 

Argosy Casino Alton

 

135,511

 

Argosy Casino Sioux City

 

92,795

 

Hollywood Casino Baton Rouge

 

75,521

 

Others

 

212,559

 

Total

 

$

1,602,825