Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2017

8.Goodwill and Other Intangible Assets

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


Balance at December 31, 2015
Goodwill	$	2,175,507
Accumulated goodwill impairment losses		(1,263,565)
Goodwill, net	$	911,942
Goodwill acquired		77,743
Balance at December 31, 2016:
Goodwill	$	2,253,250
Accumulated goodwill impairment losses		(1,263,565)
Goodwill, net	$	989,685
Goodwill acquired		36,598
Goodwill impairment losses		(18,026)
Other		(160)
Balance at December 31, 2017:
Goodwill	$	2,289,848
Accumulated goodwill impairment losses		(1,281,751)
Goodwill, net	$	1,008,097

The Company’s goodwill was tested for impairment during the third quarter (before the annual impairment 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 at that time. 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.

No goodwill impairment charges were recorded for the years ended December 31, 2016 and 2015.

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 negative carrying values 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 the Company does not believe impairment charges are required.

Indefinite‑life intangible assets consist primarily 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, 2017 and 2016:


	December 31, 2017						December 31, 2016
	(in thousands)
	Gross						Gross
	Carrying		Accumulated		Net Book		Carrying		Accumulated		Net Book
	Value		Amortization		Value		Value		Amortization		Value
Indefinite-life intangible assets	$	375,405	$	—	$	375,405	$	375,405	$	—	$	375,405
Other intangible assets		131,483		84,282		47,201		125,584		65,495		60,089
Total	$	506,888	$	84,282	$	422,606	$	500,989	$	65,495	$	435,494

Total other intangible assets decreased by $12.9 million for the year ended December 31, 2017 primarily due to amortization of $18.9 million, partially offset by acquisitions of definite-lived other intangible assets related to Illinois slot operator acquisitions. Other intangible assets have a weighted average remaining amortization period of 4.9 years.

No other intangible asset impairment charges were recorded for the years ended December 31, 2017 and 2016.

For the year ended December 31, 2015, the Company recorded other intangible assets impairment charges of $40.0 million, as of the valuation date of October 1, 2015 (the date of our annual impairment test), related to the write-off of our Plainridge Park Casino gaming license and a partial write-down of the gaming license at Hollywood Gaming at Dayton Raceway due to a reduction in the long term earnings forecast at both of these locations.

The Company’s intangible asset amortization expense was $18.9 million, $9.3 million, and $0.5 million for the years ended December 31, 2017, 2016 and 2015, respectively.

The following table presents expected intangible asset amortization expense based on existing intangible assets at December 31, 2017 (in thousands):


2018	$	13,614
2019		8,505
2020		5,844
2021		3,599
2022		3,596
Thereafter		12,043
Total	$	47,201

The Company’s remaining goodwill and other intangible assets by reporting unit at December 31, 2017 is shown below (in thousands):


			Total Intangible
Reporting Unit	Goodwill		Assets
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		110,436
Hollywood Gaming at Mahoning Valley Race Course		—		125,000
Penn Interactive Ventures		67,004		15,968
Hollywood Casino at Penn National Race Course		1,497		67,607
Prairie State Gaming		34,185		30,031
Hollywood Casino Lawrenceburg		63,189		—
Hollywood Casino Tunica		44,042		—
1st Jackpot Casino		35,929		567
Boomtown Biloxi		22,365		—
Argosy Casino Alton		9,863		8,285
Plainridge Park Casino		3,052		—
Hollywood Casino at Charles Town Races		1,354		—
Others		597		1,330
Total	$	1,008,097	$	422,606

- 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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