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Goodwill Impairment | 9 Months Ended
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Sep. 30, 2017
Goodwill Impairment |
Goodwill Impairment | 6. Goodwill Impairment The Company’s goodwill was tested for impairment during the third quarter (before the next annual impairment test date of October 1, 2017) due to a significant deferred tax valuation allowance reversal which resulted in an increase to the carrying amounts of some of its reporting units, and, as such, was determined to be a triggering event. In accordance with ASC 805 “Business Combinations”, the Company’s allocation of the purchase price for Tropicana Las Vegas, which was acquired in August 2015, included a significant amount of net operating losses (“NOL’s”). The Company did not record deferred tax assets (“DTA”) of approximately $68 million at the acquisition date due to the recognition of a full valuation allowance resulting from a three year cumulative pretax loss position. The Company’s purchase price allocation resulted in goodwill of $14.8 million being created which would not have been recorded if we had been able to recognize a deferred tax asset. As of September 30, 2017, Tropicana Las Vegas failed the quantitative goodwill impairment test as we determined its fair value was less than its carrying value. As a result, the Company determined that the goodwill for the Tropicana Las Vegas reporting unit was fully impaired and recorded an impairment charge of $14.8 million within our South/West segment. Additionally, the Company’s Sanford Orlando Kennel Club reporting unit within our Other category failed the quantitative goodwill impairment test as of September 30, 2017, and, as such, a partial impairment charge of $3.2 million was recorded. The fair value for both of these reporting units was estimated using an income approach based on the expected present value of future cash flows. Hollywood Casino at Charles Town Races and Hollywood Casino at Penn National Race Course both within the Company’s Northeast segment and Argosy Casino Alton within the Company’s Midwest segment have a negative carrying amount under the equity premise with allocated goodwill of $1.4 million, $1.5 million and $9.9 million, respectively. All three of these reporting units generate significant earnings and as such we do not believe impairment charges are required. A reconciliation of goodwill and accumulated goodwill impairment losses is as follows (in thousands):
Balance at December 31, 2016: |  |  |  |
Goodwill |  | $ | 2,253,250 |
Accumulated goodwill impairment losses |  |  | (1,263,565) |
Goodwill, net |  | $ | 989,685 |
Goodwill acquired |  |  | 36,202 |
Goodwill impairment losses |  |  | (18,026) |
Other |  |  | (160) |
Balance at September 30, 2017: |  |  |  |
Goodwill |  | $ | 2,289,292 |
Accumulated goodwill impairment losses |  |  | (1,281,591) |
Goodwill, net |  | $ | 1,007,701 |

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