Full House Resorts, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

GOODWILL AND INTANGIBLES

GOODWILL AND INTANGIBLES

12 Months Ended

Dec. 31, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND INTANGIBLES

Goodwill:

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



	December 31, 2017
	Gross Carrying Value		Additions		Accumulated Impairments			Balance at End of the Year
Silver Slipper Casino and Hotel	$	14,671	$	—	$	—		$	14,671
Bronco Billy's Casino and Hotel	4,806		—		—			4,806
Rising Star Casino Resort	1,647		—		(1,647		)	—
Northern Nevada	5,809		—		(4,000		)	1,809
Goodwill, net of accumulated impairment losses	$	26,933	$	—	$	(5,647	)	$	21,286



	December 31, 2016
	Gross Carrying Value		Additions		Accumulated Impairments			Balance at End of the Year
Silver Slipper Casino and Hotel	$	14,671	$	—	$	—		$	14,671
Bronco Billy's Casino and Hotel	—		4,806		—			4,806
Rising Star Casino Resort	1,647		—		(1,647		)	—
Northern Nevada	5,809		—		(4,000		)	1,809
Goodwill, net of accumulated impairment losses	$	22,127	$	4,806	$	(5,647	)	$	21,286

Intangible Assets:

The following tables set forth changes in the carrying value of intangible assets (in thousands):



	December 31, 2017
	Estimated Life (Years)	Gross Carrying Value		Accumulated Amortization			Accumulated Impairments, Net			Intangible Assets, Net

Customer Loyalty Programs	3	$	7,600	$	(7,600	)	$	—		$	—
Land Lease and Water Rights	46	1,420		(163		)	—			1,257
Gaming Licenses	Indefinite	17,981		—			(10,203		)	7,778
Trade Names	Indefinite	1,800		—			—			1,800
Trademarks	Indefinite	101		—			—			101
		$	28,902	$	(7,763	)	$	(10,203	)	$	10,936



	December 31, 2016
	Estimated Life (Years)	Gross Carrying Value		Accumulated Amortization			Accumulated Impairments, Net			Intangible Assets, Net

Customer Loyalty Programs	3	$	7,600	$	(7,600	)	$	—		$	—
Land Lease and Water Rights	46	1,420		(132		)	—			1,288
Gaming Licenses	Indefinite	17,981		—			(10,203		)	7,778
Trade Names	Indefinite	1,800		—			—			1,800
Trademarks	Indefinite	100		—			—			100
		$	28,901	$	(7,732	)	$	(10,203	)	$	10,966

There were no impairments to goodwill or intangible assets for the years ended December 31, 2017 and 2016.

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.

Land Lease Acquisition Costs and Water Rights. Silver Slipper recognized intangible assets related to its lease agreement with Cure Land Company, LLC (see Note 10). The lease was valued at $1 million 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 $0.4 million represented the fair value of the water rights based upon market rates in Hancock County, Mississippi.

Gaming Licenses. Gaming licenses 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 25 years and provides brand recognition. The value was estimated using a multi-period excess earning method of the income approach based upon comparable trade name royalty agreements.

Current and Future Amortization. Intangible asset amortization expense was $31,000 for each of the years ended December 31, 2017 and December 31, 2016, respectively.

Total amortization expense for intangible assets is expected to be $31,000 for each of the years ending 2018 through 2022 and $1.1 million thereafter.

- 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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