Goodwill and Intangible Assets

9 Months Ended

Sep. 30, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

The Company tests goodwill and indefinite-lived intangible assets for impairment annually in the last quarter of the year, unless events or changes in circumstances indicate that it is more likely than not that the carrying value of a reporting unit exceeds its fair value. Finite-lived intangible assets are evaluated for potential impairment whenever there is an indicator that the carrying value of an asset group may not be recoverable.

During the first quarter of 2020, the Company concluded that the COVID-19 pandemic had an adverse impact on its operations and financial results, particularly within the Company’s Casinos segment due to the mandatory property closures, which management considered an indicator of impairment, and necessitated a performance of interim qualitative and quantitative impairment tests. The Company’s interim assessment resulted in recognition of a non-cash impairment of its Casinos segment goodwill of $6.5 million.

Mandatory shut-down of the Company’s properties for a majority of the second quarter of 2020 resulted in deterioration of performance of the Company’s casino properties in particular, which required the Company to revise its cash flow projections to reflect the current economic environment, including the uncertainty surrounding the nature, timing, and extent of elimination or change of the restrictions on the Company’s operations. The revised cash flow projections also reflected the Company’s decision to keep operations of its Colorado Belle property suspended. Interim qualitative and quantitative assessment of Golden’s goodwill and intangible assets for potential impairment conducted during the second quarter of 2020 utilizing the updated projections resulted in recognition of an additional non-cash impairment of the goodwill of the Company’s Casinos segment in the amount of $18.8 million as of June 30, 2020. The assessment also indicated that the carrying value of an indefinite-lived trade name for certain of the Company’s properties within the Casinos segment exceeded its fair value and resulted in recognition of a non-cash impairment charge of $2.6 million.

The estimated fair value of goodwill and indefinite-lived intangible assets for the first and second quarter was determined using discounted cash flow models which utilized Level 3 inputs as follows: discount rate of 12.0%; long-term revenue growth rate of 2.0% to 3.0%.

The results of the qualitative and quantitative assessment of the Company’s goodwill and intangible assets for potential impairment conducted for the three months ended September 30, 2020 indicated no additional impairment of its goodwill and intangible assets as of September 30, 2020.

The following table summarizes goodwill activity by reportable segment:


(In thousands)	Casinos		Distributed Gaming		Total Goodwill
Balance, December 31, 2019	$	87,366	$	98,104	$	185,470
Goodwill impairment	(25,271)		—		(25,271)
Balance, September 30, 2020	$	62,095	$	98,104	$	160,199

Intangible assets, net, consisted of the following:


	September 30, 2020
(In thousands)	Useful Life (Years)	Gross Carrying Value		Cumulative Amortization		Impairment		Intangible Assets, Net
Indefinite-lived intangible assets
Trade names	Indefinite	$	53,690	$	—	$	(2,600)	$	51,090
		53,690		—		(2,600)		51,090
Amortizing intangible assets
Customer relationships	4-16	81,105		(28,544)		—		52,561
Player relationships	2-14	42,990		(37,118)		—		5,872
Non-compete agreements	2-5	9,840		(6,906)		—		2,934
Gaming license (1)	15	2,100		(1,034)		—		1,066
In-place lease value	4	1,170		(851)		—		319
Leasehold interest	4	570		(464)		—		106
Other	4-25	1,814		(1,251)		—		563
		139,589		(76,168)		—		63,421
Balance, September 30, 2020		$	193,279	$	(76,168)	$	(2,600)	$	114,511

(1)Relates to Rocky Gap.


	December 31, 2019
(In thousands)	Useful Life (Years)	Gross Carrying Value		Cumulative Amortization		Intangible Assets, Net
Indefinite-lived intangible assets
Trade names	Indefinite	$	53,690	$	—	$	53,690
		53,690		—		53,690
Amortizing intangible assets
Customer relationships	4-16	81,105		(24,140)		56,965
Player relationships	2-14	42,990		(26,649)		16,341
Non-compete agreements	2-5	9,840		(5,467)		4,373
Gaming license (1)	15	2,100		(929)		1,171
In-place lease value	4	1,301		(724)		577
Leasehold interest	4	570		(345)		225
Other	4-25	1,814		(1,150)		664
		139,720		(59,404)		80,316
Balance, December 31, 2019		$	193,410	$	(59,404)	$	134,006

(1)Relates to Rocky Gap.

Total amortization expense related to intangible assets was $5.7 million and $16.9 million for the three and nine months ended September 30, 2020, respectively, and $5.7 million and $17.1 million for the three and nine months ended September 30, 2019, respectively.

To the extent the Company becomes aware of new facts and circumstances arising from the COVID-19 pandemic that impact its operations, the Company will revise its cash flow projections accordingly, as its estimates of future cash flows are highly dependent upon certain assumptions, including, but not limited to, the nature, timing, and extent of elimination or change of the restrictions on the Company’s operations and the extent and timing of the economic recovery globally, nationally, and specifically within the gaming industry. If such assumptions are not accurate, the Company may be required to record impairment charges in future periods, whether in connection with its regular review procedures, or earlier, if an indicator of an impairment is present prior to such evaluation.