Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2012

Goodwill and Intangible Assets Disclosure [Abstract]

The following table sets forth changes in the carrying value of our goodwill:



	Gross Goodwill						Accumulated Impairment						Net Carrying Value
(In millions)	2012			2011			2012			2011			2012			2011
Balance at January 1	$	9,438.6		$	9,391.7		$	(6,078.2	)	$	(6,075.2	)	$	3,360.4		$	3,316.5
Additions	14.3			50.7			—			—			14.3			50.7
Impairments	—			—			(195.2		)	(3.0		)	(195.2		)	(3.0		)
Contribution of Thistledown to ROC venture	(20.1		)	—			—			—			(20.1		)	—
Other	0.9			(3.8		)	—			—			0.9			(3.8		)
Balance at December 31	$	9,433.7		$	9,438.6		$	(6,273.4	)	$	(6,078.2	)	$	3,160.3		$	3,360.4

During 2012, we acquired substantially all of the net assets of Bubbler and Buffalo and recorded goodwill of $7.5 million and $6.8 million, respectively, based on the preliminary purchase price allocation. During 2012, we contributed our interests in Thistledown to ROC and recorded a $20.1 million reduction of related goodwill. During 2011, we acquired Playtika and recorded goodwill of $50.7 million based on the purchase price allocation.

During the third quarter of 2012, we completed a preliminary annual assessment of goodwill as of September 30, which resulted in impairment charges of $247.0 million. These impairment charges were a result of the combination of an increase in our discount rate, and reduced projected revenues within our long-term operating plan as a result of the current economic climate. We finalized our annual assessment during the fourth quarter of 2012 once we completed our fair value analysis for reporting units where a step two impairment test was required and, as a result of the final assessment, we recorded a reversal of $60.0 million in impairment charges related to certain reporting units which were impaired during the third quarter. Also in the fourth quarter of 2012, we performed an additional impairment assessment, due to further reduced projected earnings within our long-term operating plan, and as a result we recorded an additional impairment charge of $8.2 million related to certain reporting units. Net goodwill impairments recorded during 2012 totaled $195.2 million. The Company did not have any reporting units with a zero or negative book value as of December 31, 2012.

During the third quarter of 2011, we completed a preliminary annual assessment of goodwill as of September 30, which did not result in an impairment charge. We finalized our annual assessment during the fourth quarter of 2011 once we completed our fair value analysis for reporting units where a step two impairment test was required and, as a result, we recorded an impairment of $3.0 million related to certain properties.

The following table sets forth the changes in the carrying value of our intangible assets other than goodwill:



(In millions)	Amortizing			Non-Amortizing
Balance at December 31, 2010	$	1,235.1		$	3,184.0
Impairments	—			(8.0		)
Additions	85.4			23.5
Amortization expense	(156.7		)	—
Foreign currency translation	(0.1		)	—
Balance at December 31, 2011	1,163.7			3,199.5
Impairments	—			(242.0		)
Additions	37.8			—
Amortization expense	(174.6		)	—
Foreign currency translation	0.7			0.6
Balance at December 31, 2012	$	1,027.6		$	2,958.1

During 2012, we acquired substantially all of the net assets of Buffalo Studios LLC and, based on the preliminary purchase price allocation, recorded amortizing intangible assets of $37.8 million related to developed games and game titles.

During the second quarter of 2012, due to weak economic conditions in certain gaming markets in which we operate, we performed an interim impairment assessment of non-amortizing intangible assets. This analysis resulted in an impairment charge of $33.0 million related to our trademark assets. During the third quarter of 2012, we completed our annual assessment of non-amortizing intangible assets as of September 30, which resulted in impairment charges of $159.0 million, comprised of $127.0 million related to trademarks and $32.0 million related to gaming rights. These impairment charges were the result of a combination of an increase in our discount rate, and reduced projected revenues associated with these intangible assets within our long-term operating plan as a result of the current economic climate. During the fourth quarter of 2012, due to continued weak economic conditions in certain gaming markets in which we operate, we performed an interim impairment assessment of non-amortizing intangible assets. This analysis resulted in an impairment charge of $50.0 million, comprised of $49.0 million related to trademarks and $1.0 million related to gaming rights. The total amount of impairment charges recorded during 2012 was $242.0 million, comprised of $209.0 million related to trademarks and $33.0 million related to gaming rights.

The table below summarizes our impairment charges for goodwill and other non-amortizing intangible assets included in intangible and tangible asset impairment charges in our Consolidated Statements of Comprehensive Loss for the period shown:



	Year Ended December 31,
(In millions)	2012		2011		2010
Goodwill	$	195.2	$	3.0	$	92.0
Trademarks	209.0		8.0		20.0
Gaming Rights and other	33.0		—		72.0
Total impairment of goodwill and other non-amortizing intangible assets	$	437.2	$	11.0	$	184.0

The following table provides the gross carrying value and accumulated amortization for each major class of intangible assets other than goodwill:



	December 31, 2012								December 31, 2011
(Dollars in millions)	Weighted Average Remaining Useful Life (in years)	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Amortizing intangible assets
Customer relationships	7.0	$	1,456.7	$	(618.0	)	$	838.7	$	1,456.7	$	(492.4	)	$	964.3
Contract rights	2.0	145.1		(66.3		)	78.8		144.4		(52.3		)	92.1
Patented technology	3.8	156.7		(76.6		)	80.1		118.9		(45.9		)	73.0
Gaming rights	11.5	42.8		(12.8		)	30.0		42.8		(10.2		)	32.6
Trademarks	0.1	1.7		(1.7		)	—		7.8		(6.1		)	1.7
		$	1,803.0	$	(775.4	)	1,027.6		$	1,770.6	$	(606.9	)	1,163.7
Non-amortizing intangible assets
Trademarks							1,699.7							1,908.7
Gaming rights							1,258.4							1,290.8
							2,958.1							3,199.5
Total intangible assets other than goodwill							$	3,985.7						$	4,363.2

The aggregate amortization expense for those intangible assets that continue to be amortized is reflected in amortization of intangible assets in the Consolidated Statements of Comprehensive Loss and was $174.6 million, $156.7 million and $160.8 million for the years ended December 31, 2012, 2011, and 2010, respectively. Estimated annual amortization expense for each of the five years from 2013 through 2017 is $163.9 million, $151.9 million, $150.3 million, $135.4 million, and $126.0 million, respectively.

- 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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