Annual report pursuant to Section 13 and 15(d)

GOODWILL AND OTHER INTANGIBLES

v3.20.4
GOODWILL AND OTHER INTANGIBLES
12 Months Ended
Dec. 31, 2020
GOODWILL AND OTHER INTANGIBLES  
GOODWILL AND OTHER INTANGIBLES

4. GOODWILL AND OTHER INTANGIBLES

Goodwill:

The following tables set forth changes in the carrying value of goodwill by segment:

 

 

 

 

 

 

 

 

 

 

 

 

 

(In Thousands)

 

December 31, 2020

 

    

Gross

    

 

 

    

 

 

    

Balance at

 

 

Carrying

 

 

 

 

Accumulated

 

End of the

 

 

Value

 

Additions

 

Impairments

 

Year

Silver Slipper Casino and Hotel

 

$

14,671

 

$

 —

 

$

 —

 

$

14,671

Rising Star Casino Resort

 

 

1,647

 

 

 —

 

 

(1,647)

 

 

 —

Bronco Billy’s Casino and Hotel

 

 

4,806

 

 

 —

 

 

 —

 

 

4,806

Northern Nevada Casinos

 

 

5,809

 

 

 —

 

 

(4,000)

 

 

1,809

 

 

$

26,933

 

$

 —

 

$

(5,647)

 

$

21,286

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(In Thousands)

 

December 31, 2019

 

    

Gross

    

 

 

    

 

 

    

Balance at

 

 

Carrying

 

 

 

 

Accumulated

 

End of the

 

 

Value

 

Additions

 

Impairments

 

Year

Silver Slipper Casino and Hotel

 

$

14,671

 

$

 —

 

$

 —

 

$

14,671

Rising Star Casino Resort

 

 

1,647

 

 

 —

 

 

(1,647)

 

 

 —

Bronco Billy’s Casino and Hotel

 

 

4,806

 

 

 —

 

 

 —

 

 

4,806

Northern Nevada Casinos

 

 

5,809

 

 

 —

 

 

(4,000)

 

 

1,809

 

 

$

26,933

 

$

 —

 

$

(5,647)

 

$

21,286

 

Other Intangible Assets:

The following tables set forth changes in the carrying value of intangible assets other than goodwill:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(In Thousands)

 

December 31, 2020

 

    

Estimated

    

Gross

    

 

 

    

Accumulated

    

Other

 

 

Life

 

Carrying

 

Accumulated

 

Impairments,

 

Intangible

 

 

(Years)

 

Value

 

Amortization

 

Net

 

Assets, Net

Customer Loyalty Programs

 

3

 

$

7,600

 

$

(7,600)

 

$

 —

 

$

 —

Land Lease and Water Rights

 

46

 

 

1,420

 

 

(257)

 

 

 —

 

 

1,163

Casino Lease Option

 

3

 

 

190

 

 

(151)

 

 

 —

 

 

39

Gaming Licenses

 

Indefinite

 

 

18,046

 

 

 —

 

 

(10,203)

 

 

7,843

Trade Names

 

Indefinite

 

 

1,800

 

 

 —

 

 

 —

 

 

1,800

Trademarks

 

Indefinite

 

 

118

 

 

 —

 

 

 —

 

 

118

 

 

 

 

$

29,174

 

$

(8,008)

 

$

(10,203)

 

$

10,963

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(In Thousands)

 

December 31, 2019

 

    

Estimated

    

Gross

    

 

 

    

Accumulated

    

Other

 

 

Life

 

Carrying

 

Accumulated

 

Impairments,

 

Intangible

 

 

(Years)

 

Value

 

Amortization

 

Net

 

Assets, Net

Customer Loyalty Programs

 

3

 

$

7,600

 

$

(7,600)

 

$

 —

 

$

 —

Land Lease and Water Rights

 

46

 

 

1,420

 

 

(226)

 

 

 —

 

 

1,194

Casino Lease Option

 

3

 

 

190

 

 

(87)

 

 

 —

 

 

103

Gaming Licenses

 

Indefinite

 

 

18,046

 

 

 —

 

 

(10,203)

 

 

7,843

Trade Names

 

Indefinite

 

 

1,800

 

 

 —

 

 

 —

 

 

1,800

Trademarks

 

Indefinite

 

 

116

 

 

 —

 

 

 —

 

 

116

 

 

 

 

$

29,172

 

$

(7,913)

 

$

(10,203)

 

$

11,056

 

There were no impairments to goodwill or other intangible assets for the years ended December 31, 2020 and 2019.

Customer Loyalty Programs. Customer loyalty programs represent the value of repeat business associated with our loyalty programs. The values of $5.9 million for Silver Slipper and $1.7 million for Rising Star’s customer loyalty programs, respectively, were determined using a multi-period excess earning method of the income approach, which examines the economic returns contributed by the identified tangible and intangible assets of a company, and then isolates the excess return, which is attributable to the asset being valued, based on cash flows attributable to the customer loyalty program. The values of the customer loyalty programs for Rising Star and Silver Slipper have been fully amortized in prior years.

Land Lease Acquisition Costs and Water Rights. Silver Slipper recognized intangible assets related to its lease agreement with Cure Land Company, LLC (see Note 7). The lease was valued at $970,000 and represents the excess fair value of the land over the estimated net present value of the land lease payments, and the water rights value of $450,000 represents the fair value of the water rights based upon market rates in Hancock County, Mississippi.

Casino Lease Option. Casino lease option represents total amounts paid in order to extend the lease option for the Imperial Casino, previously known as the Christmas Casino at Bronco Billy’s until September 2020. The Company is currently evaluating other concepts for the leased space, which is located on a key corner in Cripple Creek, Colorado. Although the Company has an option to buy out the lease prior to expiration of the initial lease term or as extended, the option amounts paid cannot be applied to the purchase price. Therefore, the total option amounts paid will be amortized according to the initial lease term, which commenced in August 2018 (see Note 7).

Gaming Licenses. Gaming licenses primarily represent the value of the license to conduct gaming in certain jurisdictions, which are subject to highly extensive regulatory oversight and, in some cases, a limitation on the number of licenses available for issuance. The values of gaming licenses were primarily estimated using a multi-period excess earning method of the income approach, which examines the economic returns contributed by the identified tangible and intangible assets of a company, and then isolates the excess return, which is attributable to the asset being valued, based on cash flows attributable to the gaming license.

Trade Names. Trade names represents the value of the Bronco Billy’s casino name, which has existed for approximately 29 years and provides brand recognition. The value was estimated using a relief-from-royalty method of the income approach based upon comparable trade name royalty agreements.

Current and Future Amortization. Intangible asset amortization expense was approximately $95,000 and $94,000 for the years ended December 31, 2020 and 2019, respectively.

Future amortization expense for intangible assets is as follows:

 

 

 

 

(In Thousands)

 

 

 

 

 

 

 

For Years ending December 31, 

    

Amortization Expense

2021

 

$

70

2022

 

 

31

2023

 

 

31

2024

 

 

31

2025

 

 

31

Thereafter

 

 

1,007

 

 

$

1,201