Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2014

Goodwill and Other Intangible Assets

10. Goodwill and Other Intangible Assets

Remaining goodwill consists mainly of goodwill from the acquisitions of Boomtown Biloxi in August 2000, Hollywood Casino Corporation in March 2003, Argosy Gaming Company in October 2005, Zia Park Casino in April 2007, and Hollywood Casino St. Louis in November 2012. A reconciliation of goodwill and accumulated goodwill impairment losses is as follows (in thousands):

	As Restated
Balance at December 31, 2012:
Goodwill	$	2,214,546
Accumulated goodwill impairment losses		(833,857	)

Goodwill, net	$	1,380,689

Goodwill impairment losses		(348,887	)
Contribution of Hollywood Casino Baton Rouge to GLPI		(75,521	)
Other		(4,328	)

Balance at December 31, 2013:
Goodwill	$	2,134,697
Accumulated goodwill impairment losses		(1,182,744	)

Goodwill, net	$	951,953

Goodwill acquired		3,052
Goodwill impairment losses		(80,821	)

Balance at December 31, 2014:
Goodwill	$	2,137,749
Accumulated goodwill impairment losses		(1,263,565	)

Goodwill, net	$	874,184

Indefinite-life intangible assets consist mainly of gaming licenses. The table below presents the gross carrying value, accumulated amortization, and net book value of each major class of other intangible assets at December 31, 2014 and 2013:

	December 31, 2014						December 31, 2013
	(as restated)						(as restated)
	(in thousands)
	Gross Carrying Value		Accumulated Amortization		Net Book Value		Gross Carrying Value		Accumulated Amortization		Net Book Value
Indefinite-life intangible assets	$	418,991	$	—	$	418,991	$	223,834	$	—	$	223,834
Argosy Casino Sioux City gaming license		20,949		20,949		—		20,949		12,569		8,380
Other intangible assets		56,126		55,664		462		55,665		53,621		2,044

Total	$	496,066	$	76,613	$	419,453	$	300,448	$	66,190	$	234,258

Other intangible assets increased by $185.2 million for the year ended December 31, 2014 primarily due to gaming license fees of $100.0 million for Hollywood Gaming at Dayton Raceway and Hollywood Gaming at Mahoning Valley Race Course, the capitalization of relocation fees associated with obtaining the gaming licenses for these two facilities totaling $150.0 million, a $25.0 million gaming license fee associated with Plainridge Park Casino (see Note 7), all of which were partially offset by impairment charges and amortization for the year ended December 31, 2014.

In June 2013, the Company finalized the terms of its memorandum of understanding with the State of Ohio, which included an agreement by the Company to pay a relocation fee in return for being able to relocate its existing racetracks in Toledo and Grove City to Dayton and Austintown, respectively. Upon opening, the relocation fee for each new racino was recorded at the present value of the contractual obligation, which was calculated to be $75 million based on the 5% discount rate included in the agreement (See Note 12 for further details on the obligation). Half of the gaming license fee for both Ohio racinos has been paid ($10 million for each facility in the second quarter of 2014 and $15 million upon opening for each facility) with the remaining $50 million ($25 million for each facility) due one year from commencement of operations. The remaining gaming license fees to be paid are included in accrued expenses within the consolidated balance sheet at December 31, 2014.

For the year ended December 31, 2014, the Company recorded goodwill and other intangible assets impairment charges of $80.8 million and $74.5 million, respectively, as of valuation date of October 1, 2014, the date of its annual impairment test, as it determined that a portion of the value of its goodwill and other intangible assets was impaired due to the Company's outlook of continued challenging regional gaming conditions at certain properties which persisted in 2014 in its Southern Plains segment, as well as for the write-off of a trademark intangible asset in the West segment.

For the year ended December 31, 2013, the Company recorded goodwill and other intangible assets impairment charges of $249.3 million and $311.0 million, respectively, as of valuation date of October 1, 2013, the date of its annual impairment test, and $30.9 million and $133.1 million, respectively, as of valuation date of November 1, 2013 (the Spin-Off date), as it determined that portions of the value of its goodwill and other intangible assets were impaired. Subsequent to the Spin-Off, the Company is responsible monthly for a single significant financing payment to GLPI under the Master Lease. For impairment valuation purposes, the Company allocates the financing payment to its reporting units that utilize property that is subject to the Master Lease.

Additionally, as a result of a new gaming license being awarded for the development of a new casino in Sioux City, Iowa to another applicant in April 2013 (see Note 14 for further details), the Company recorded a goodwill and other intangible asset impairment charge of $68.7 million and $3.1 million, respectively, for Argosy Casino Sioux City during the year ended December 31, 2013, as the Company determined that the fair value of its Sioux City reporting unit was less than its carrying amount based on the Company's analysis of the estimated future expected cash flows the Company anticipated receiving from the operations of the Sioux City facility. Furthermore, the remaining gaming license for Argosy Casino Sioux City of $20.9 million at time of the impairment was accounted for as a definite lived intangible asset and was amortized on a straight line basis through June 2014, the opening date of the new facility.

In addition, in conjunction with the Spin-Off, the Company contributed Hollywood Casino Baton Rouge and Hollywood Casino Perryville, which had goodwill of $75.5 million and a gaming license of $9.6 million, respectively, to GLPI on November 1, 2013.

The Company's intangible asset amortization expense was $11.4 million, $16.1 million, and $0.8 million for the years ended December 31, 2014, 2013 and 2012, respectively.

The following table presents expected intangible asset amortization expense based on existing intangible assets at December 31, 2014 (in thousands):

2015	$	—
2016		33
2017		66
2018		66
2019		66
Thereafter		231

Total	$	462

The Company's remaining goodwill and other intangible assets by reporting unit at December 31, 2014 is shown below (in thousands):

Reporting Unit	Goodwill		Other Intangible Assets
	(as restated)		(as restated)
Hollywood Casino St. Louis	$	205,783	$	58,418
Hollywood Casino Aurora		207,207		—
Argosy Casino Riverside		154,332		4,964
Zia Park Casino		142,359		—
Hollywood Gaming at Dayton Raceway		15,339		125,000
Hollywood Gaming at Mahoning Valley Race Course		—		125,000
Hollywood Casino at Penn National Race Course		1,497		67,607
Hollywood Casino Lawrenceburg		63,189		—
Hollywood Casino Tunica		44,042		—
Plainridge Park Casino		3,052		25,297
Boomtown Biloxi		22,365		—
Argosy Casino Alton		9,863		8,285
Hollywood Casino Joliet		—		3,724
Others		5,156		1,158

Total	$	874,184	$	419,453

- 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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