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Intangible Assets | 12 Months Ended
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Dec. 31, 2012
Intangible Assets, Net (Excluding Goodwill) [Abstract] |
Intangible Assets | INTANGIBLE ASSETS Intangible assets consist of the following:
| December 31, 2012
| Weighted |  | Gross |  |  |  | Cumulative |  |
| Average Life |  | Carrying |  | Cumulative |  | Impairment |  | Intangible
| Remaining |  | Value |  | Amortization |  | Losses |  | Assets, Net
|  |  | (In thousands)
Amortizing intangibles: |  |  |  |  |  |  |  |  |
Customer relationships | 4.5 years |  | $ | 154,000 |  |  | $ | (23,059 | ) |  | $ | — |  |  | $ | 130,941 |
Non-competition agreement | 0.9 years |  | 3,200 |  |  | (354 | ) |  | — |  |  | 2,846 |
Favorable lease rates | 35.4 years |  | 45,370 |  |  | (8,867 | ) |  | — |  |  | 36,503 |
Development agreement | — |  | 21,373 |  |  | — |  |  | — |  |  | 21,373 |
|  |  | 223,943 |  |  | (32,280 | ) |  | — |  |  | 191,663 |
Indefinite lived intangible assets: |  |  |  |  |  |  |  |  |
Trademarks | Indefinite |  | 191,800 |  |  | — |  |  | (5,000 | ) |  | 186,800 |
Gaming license rights | Indefinite |  | 955,135 |  |  | (33,960 | ) |  | (180,000 | ) |  | 741,175 |
|  |  | 1,146,935 |  |  | (33,960 | ) |  | (185,000 | ) |  | 927,975 |
Balance, December 31, 2012 |  |  | $ | 1,370,878 |  |  | $ | (66,240 | ) |  | $ | (185,000 | ) |  | $ | 1,119,638 |
| December 31, 2011
| Weighted |  | Gross |  |  |  | Cumulative |  |
| Average Life |  | Carrying |  | Cumulative |  | Impairment |  | Intangible
| Remaining |  | Value |  | Amortization |  | Losses |  | Assets, Net
|  |  | (In thousands)
Amortizing intangibles: |  |  |  |  |  |  |  |  |
Customer relationships | 2.2 years |  | $ | 17,700 |  |  | $ | (10,026 | ) |  | $ | — |  |  | $ | 7,674 |
Favorable lease rates | 36.4 years |  | 45,370 |  |  | (7,825 | ) |  | — |  |  | 37,545 |
Development agreement | — |  | 21,373 |  |  | — |  |  | — |  |  | 21,373 |
|  |  | 84,443 |  |  | (17,851 | ) |  | — |  |  | 66,592 |
Indefinite lived intangible assets: |  |  |  |  |  |  |  |  |
Trademarks | Indefinite |  | 141,000 |  |  | — |  |  | (5,000 | ) |  | 136,000 |
Gaming license rights | Indefinite |  | 567,886 |  |  | (33,960 | ) |  | (162,500 | ) |  | 371,426 |
|  |  | 708,886 |  |  | (33,960 | ) |  | (167,500 | ) |  | 507,426 |
Balance, December 31, 2011 |  |  | $ | 793,329 |  |  | $ | (51,811 | ) |  | $ | (167,500 | ) |  | $ | 574,018 |
Amortizing Intangible Assets Customer Relationships Customer relationships represent the value of repeat business associated with our customer loyalty programs. The value of customer relationships is determined using a multi-period excess earnings method, which is a specific discounted cash flow model. The value is determined at an amount equal to the present value of the incremental after-tax cash flows attributable only to these customers, discounted to present value at a risk-adjusted rate of return. With respect to the application of this methodology, we used the following significant projections and assumptions: revenue of our rated customers, based on expected level of play; promotional allowances provided to these existing customers; attrition rate related to these customers; operating expenses; general and administrative expenses; trademark expense; discount rate; and the present value of tax benefit. Favorable Lease Rates Favorable lease rates represent the rental rates for assumed land leases that are favorable to comparable market rates. The fair value is determined on a technique whereby the difference between the lease rate and the then current market rate for the remaining contractual term is discounted to present value. The assumptions underlying this computation include the actual lease rates, the expected remaining lease term, including renewal options, based on the existing lease; current rates of rent for leases on comparable properties with similar terms obtained from market data and analysis; and an assumed discount rate. The estimates underlying the result covered a term of 41 to 52 years. Development Agreement Development agreement is an acquired contract under which a gaming facility will be developed on the Tribe's land. This asset although amortizable, will not be amortized until development is completed, which at December 31, 2012 remains indeterminate. In the interim, this asset will be subject to an annual impairment test. Indefinite Lived Intangible Assets Trademarks Trademarks are based on the value of our brands, which reflect the level of service and quality we provide and from which we generate repeat business. Trademarks are valued using the relief from royalty method, which presumes that without ownership of such trademark, we would have to make a stream of payments to a brand or franchise owner in return for the right to use their name. By virtue of this asset, we avoid any such payments and record the related intangible value of our ownership of the Borgata name. We used the following significant projections and assumptions to determine value under the relief from royalty method: revenue from gaming and hotel activities; royalty rate; tax expense; terminal growth rate; discount rate; and the present value of tax benefit. The projections underlying this discounted cash flow model were forecasted for 15 years. Gaming License Rights Gaming license rights represent the value of the license to conduct gaming in certain jurisdictions, which is subject to highly extensive regulatory oversight, and a limitation on the number of licenses available for issuance therein. The value of gaming licenses is determined using a multi-period excess earnings method, which is a specific discounted cash flow model. The value is determined at an amount equal to the present value of the incremental after-tax cash flows attributable only to future gaming revenue, discounted to present value at a risk-adjusted rate of return. With respect to the application of this methodology, we used the following significant projections and assumptions: gaming revenues; gaming operating expenses; general and administrative expenses; tax expense; terminal value; and discount rate. These projections are modeled for a five-year period. Activity For the Years Ended December 31, 2012, 2011 and 2010 The following table sets forth the changes in these intangible assets during the years ended December 31, 2012, 2011 and 2010:
| Customer Relationships |  | Non-competition Agreement |  | Favorable Lease Rates |  | Development Agreements |  | Trademarks |  | Gaming License Rights |  | Intangible Assets, Net
| (In thousands)
Balance, January 1, 2010 | $ | — |  |  | $ | — |  |  | $ | 39,631 |  |  | $ | — |  |  | $ | 50,700 |  |  | $ | 371,426 |  |  | $ | 461,757 |
Additions | 14,000 |  |  | — |  |  | — |  |  | — |  |  | 65,000 |  |  | — |  |  | 79,000 |
Impairments | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Amortization | — |  |  | — |  |  | (1,043 | ) |  | — |  |  | — |  |  | — |  |  | (1,043 | )
Balance, December 31, 2010 | 14,000 |  |  | — |  |  | 38,588 |  |  | — |  |  | 115,700 |  |  | 371,426 |  |  | 539,714 |
Additions | 3,300 |  |  | — |  |  | — |  |  | 21,373 |  |  | 25,300 |  |  | — |  |  | 49,973 |
Impairments | — |  |  | — |  |  | — |  |  | — |  |  | (5,000 | ) |  | — |  |  | (5,000 | )
Amortization | (9,626 | ) | — |  | — |  |  | (1,043 | ) |  | — |  |  | — |  |  | — |  |  | (10,669 | )
Balance, December 31, 2011 | 7,674 |  |  | — |  |  | 37,545 |  |  | 21,373 |  |  | 136,000 |  |  | 371,426 |  |  | 574,018 |
Additions | 136,300 |  |  | 3,200 |  |  | — |  |  | — |  |  | 50,800 |  |  | 387,249 |  |  | 577,549 |
Impairments | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (17,500 | ) |  | (17,500 | )
Amortization | (13,033 | ) | — |  | (354 | ) |  | (1,042 | ) |  | — |  |  | — |  |  | — |  |  | (14,429 | )
Balance, December 31, 2012 | $ | 130,941 |  |  | $ | 2,846 |  |  | $ | 36,503 |  |  | $ | 21,373 |  |  | $ | 186,800 |  |  | $ | 741,175 |  |  | $ | 1,119,638 |
Future Amortization Customer relationships are being amortized on an accelerated basis over an approximate remaining five-year period. Favorable lease rates are being amortized on a straight-line basis over a weighted-average original useful life of 43.8 years. Future amortization is as follows:
|  | Customer Relationships |  | Non-competition Agreement |  | Favorable Lease Rates |  | Total
|  | (In thousands)
For the year ending December 31, |  |  |  |  |  |  |  |
2013 |  | $ | 45,675 |  |  | $ | 2,846 |  |  | $ | 1,043 |  |  | $ | 49,564 |
2014 |  | 33,310 |  |  | — |  |  | 1,043 |  |  | 34,353 |
2015 |  | 25,652 |  |  | — |  |  | 1,043 |  |  | 26,695 |
2016 |  | 14,870 |  |  | — |  |  | 1,043 |  |  | 15,913 |
2017 |  | 11,434 |  |  | — |  |  | 1,043 |  |  | 12,477 |
Thereafter |  | — |  |  | — |  |  | 31,288 |  |  | 31,288 |
Total future amortization |  | $ | 130,941 |  |  | $ | 2,846 |  |  | $ | 36,503 |  |  | $ | 170,290 |
Trademarks and gaming license rights are not subject to amortization, as we have determined that they have an indefinite useful life; however, these assets are subject to an annual impairment test. Impairment Considerations Indefinite lived intangible assets are not subject to amortization, but they are subject to an annual impairment test each year and between annual test dates in certain circumstances. Interim Testing During the first quarter of 2012, we performed an interim impairment test of the Borgata trademark asset. Having performed an initial interim impairment test related to the Borgata trademark asset during the first quarter of 2011, we had established the first quarter as its prospective annual impairment test date. Our analyses consisted of a valuation of the Borgata trademark, using the relief from royalty method, as discussed above. The impairment test consisted of a comparison of the fair value of trademark with its carrying amount. As a result of the impairment test, we did not record any impairment in the first quarter of 2012. During the first quarter of 2011, we performed an interim impairment test of the Borgata trademark asset we recorded in connection with the valuation of Borgata due to our consideration of certain facts and circumstances surrounding an adverse change in the business climate in Atlantic City. We believe our actual results had been adversely impacted by increased regional competition and that, in addition, our projected future results would be further impacted by the opening of a new property in Atlantic City, which was announced in February 2011. We also believe the refinancing of Borgata's debt and recapitalization of its member equity contributed to the results of this impairment test. As a result of the impairment test, we recorded a $5.0 million impairment charge in the first quarter of 2011, representing the amount by which the carrying amount exceeded its fair value. Annual Testing During the fourth quarter of 2012, the Company changed the date of its annual indefinite-lived intangible assets impairment test dates to October 1 to better align with the Company's annual financial planning process. Prior to the fourth quarter of 2012, the Company performed annual impairment tests on defined sub-sets of its indefinite-lived intangible assets on January 1, April 1 and October 1. The January 1 and April 1 tests were performed on their respective test dates during 2012, and did not result in any impairment. During the year ended December 31, 2012, Sam's Town Shreveport's operating results were less than expected due to weaker than anticipated discretionary consumer spending and increased competition. As a result, we recognized a non-cash impairment charge of $17.5 million to our gaming license rights at our Sam's Town Shreveport location. The impairment testing performed during the second quarter of 2012, prior to the change of impairment testing date to October 1, did not require us to record an impairment charge. The impairment testing performed in the second quarter of 2011 also did not require us to record an impairment charge; however, if our estimates of projected cash flows related to these assets are not achieved, or if any other significant assumptions are changed, we may be subject to an interim impairment test prior to our next annual scheduled impairment test. Such test could result in a future impairment charge, which could have a material adverse impact on our consolidated financial statements. Gaming license rights are tested for impairment using a discounted cash flow approach, and trademarks are tested for impairment using the relief-from-royalty method. If the fair value of an indefinite-lived intangible asset is less than its carrying amount, an impairment loss is recognized equal to the difference. If our estimates of projected cash flows related to these assets are not achieved, or if any other significant assumptions are changed, we may be subject to an interim impairment test prior to our next annual scheduled impairment test. As a result of such test, we may be subject to a future impairment charge, which could have a material adverse impact on our consolidated financial statements.

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- Definition The entire disclosure for all or part of the information related to intangible assets. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 142 -Paragraph 44, 45, 46 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -SubTopic 30 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=7658586&loc=d3e16323-109275 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -SubTopic 30 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=7658586&loc=d3e16373-109275 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -SubTopic 30 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=7658586&loc=d3e16265-109275 + Details
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