Financial Instruments and Fair Value Measurements |
3 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2017 | ||||||||||
Fair Value Disclosures [Abstract] | ||||||||||
Financial Instruments and Fair Value Measurements | Note 9 – Financial Instruments and Fair Value Measurements Overview The authoritative accounting guidance for fair value measurements specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company's market assumptions. These inputs create the following fair value hierarchy:
Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Thus, assets and liabilities categorized as Level 3 may be measured at fair value using inputs that are observable (Levels 1 and 2) and unobservable (Level 3). Management's assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of assets and liabilities and their placement within the fair value hierarchy levels. Balances Measured at Fair Value For the Company’s cash and cash equivalents, accounts receivable and payable, short-term borrowings and accrued and other current liabilities, the carrying amounts approximate fair value because of the short duration of these financial instruments. As of March 31, 2017 and December 31, 2016, the fair value of the Company’s long-term debt approximated the carrying value based upon the Company’s expected borrowing rate for debt with similar remaining maturities and comparable risk. In connection with the Montana Acquisitions, the Company preliminarily recognized the acquired assets at fair value. For the Initial Montana Acquisition, these amounts were finalized as of March 31, 2017. All amounts are recognized as Level 3 measurements due to the subjective nature of the unobservable inputs used to determine the fair values. Additionally, in connection with the Initial Montana Acquisition, the Company is required to pay the sellers contingent consideration of up to a total of $2.0 million in cash paid in four quarterly payments beginning in September 2017, subject to certain potential adjustments based upon the availability of certain gaming machines and, if applicable, the performance of replacement games. The fair value of the Company’s contingent consideration recorded in connection with the Initial Montana Acquisition was estimated to be $2.0 million as of March 31, 2017 and is recorded in “Other accrued expenses” and “Other long-term obligations” on the Company’s consolidated balance sheet. Changes to the estimated fair value of the contingent consideration will be recognized in earnings of the Company. See Note 2, Acquisitions, for a discussion of the Montana Acquisitions. Balances Measured at Fair Value on a Non-recurring Basis The identified intangible assets acquired in connection with the Second Montana Acquisition and the Initial Montana Acquisition have been valued (on a preliminary basis for the Second Montana Acquisition) using unobservable (Level 3) inputs at a fair value of $11.4 million (on a preliminary basis) and $14.4 million, respectively (see Note 2, Acquisitions). The Company owns various parcels of developed and undeveloped land relating to its casinos in Pahrump, Nevada. The Company performs an impairment analysis on the land it owns at least quarterly and determined that no impairment had occurred as of March 31, 2017 and December 31, 2016.
|