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Note 3 - Intangible Assets and Goodwill

9 Months Ended

Jul. 31, 2012

Goodwill and Intangible Assets Disclosure [Text Block]

3. INTANGIBLE ASSETS AND GOODWILL

Amortizable intangible assets. All of our recorded intangible assets, excluding goodwill and the StargamesTM and CARDTM tradenames, are subject to amortization. We amortize our intangible assets as the economic benefits of the intangible asset are consumed or otherwise used up. Amortization expense was $2.2 million and $2.5 million for the three months ended July 31, 2012 and 2011, respectively and $6.8 and $7.4 million for the nine months ended July 31, 2012 and 2011, respectively. Amortization expenses are included in cost of leases and royalties and cost of sales and service, except for customer relationships which are included in selling, general and administrative expenses.

Amortizable intangible assets are comprised of the following:

	Weighted Average Useful Life (years)			July 31, 2012			October 31, 2011
				(In thousands)
Amortizable intangible assets:

Patents, games and products			10	$	65,807		$	68,999
Less: accumulated amortization					(51,068	)		(52,145	)
					14,739			16,854
Customer relationships			10		26,702			25,688
Less: accumulated amortization					(14,571	)		(12,829	)
					12,131			12,859
Licenses and other	6	-	9		22,971			18,925
Less: accumulated amortization					(9,377	)		(7,581	)
					13,594			11,344
Total				$	40,464		$	41,057

Acquired Intangible Assets. In the current year, we acquired certain intangible assets relating to the purchase of table game intellectual property and acquisition of licenses to be used in our EGM segment. We allocated the purchase price to patents, games and products for $0.9 million and to customer relationships for $1.6M, both of which have a weighted-average amortization period of ten years. We allocated $3.6 million to licenses and other with a weighted-average amortization period of seven years. Total intangible assets acquired during the nine months ended July 31, 2012 are being amortized over a weighted-average useful life of approximately 8 years.

Tradenames. Intangibles with an indefinite life, consisting of the Stargames™ and CARD™ tradenames, are not amortized, and were $24.7 million and $25.5 million as of July 31, 2012 and October 31, 2011, respectively.

Goodwill. Changes in the carrying amount of goodwill for the years ended October 31, 2010, 2011 and the nine months ended July 31, 2012, are as follows:

Activity by Segment	Utility			Proprietary Table Games		Electronic Table Systems			Electronic Gaming Machines			Total
	(In thousands)

Goodwill	$	42,560		$	9,326	$	34,188		$	11,995		$	98,069
Accumulated impairments		-			-		(22,137	)		-			(22,137	)
Balance as of October 31, 2010	$	42,560		$	9,326	$	12,051		$	11,995		$	75,932

Foreign currency translation adjustment		1,459			-		1,140			1,135		$	3,734
Acquisition		4,799			-		-			-			4,799
Other		-			927		-			-			927
Balance as of October 31, 2011	$	48,818		$	10,253	$	13,191		$	13,130		$	85,392

Foreign currency translation adjustment		(4,863	)				(348	)		(348	)	$	(5,559	)
Acquisition					3,000								3,000
Other					690								690
Balance as of July 31, 2012	$	43,955		$	13,943	$	12,843		$	12,782		$	83,523

The $3.0 million of additional goodwill in our PTG segment relates to the acquisition of intellectual property that was treated as a business acquisition for accounting purposes.

The $0.7 million of additional goodwill in our PTG segment relates to our acquisition of certain assets from Bet Technology, Inc. (“BTI”) in 2004. In 2004, we recorded an initial estimated liability of $7.6 million for contingent installment payments computed as the excess fair value of the acquired assets over the fixed installments and other direct costs. In November 2004, we began paying monthly note installments based on a percentage of certain revenue from BTI games for a period of up to ten years, not to exceed $12.0 million. The final principal and interest payment related to our initial estimated liability of $7.6 million was paid in February 2009 and all payments made subsequently have been recorded as additional goodwill. As of July 31, 2012, we have paid approximately $11.2 million of the $12.0 million maximum amount.

- 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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