Note 5 - Intangible Assets And Goodwill
 12 Months Ended
Oct. 31, 2012
Goodwill and Intangible Assets Disclosure [Text Block]
5. INTANGIBLE ASSETS AND GOODWILL

Amortizable intangible assets.  All of our recorded intangible assets, excluding goodwill and the Stargames and CARD 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 $9.0 million, $10.1 million and $11.0 million for fiscal 2012, 2011 and 2010, 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 as of October 31:

 
 Weighted Average
 
October 31,
 
 
 Useful Life (years)
 
2012
   
2011
 
     
(In thousands)
 
Amortizable intangible assets:
             
               
Patents, games and products
 10
  $ 67,174     $ 68,999  
Less: accumulated amortization
      (53,182 )     (52,145 )
        13,992       16,854  
Customer relationships
 10
    26,623       25,688  
Less: accumulated amortization
      (15,197 )     (12,829 )
        11,426       12,859  
Licenses and other
 6
    22,935       18,925  
Less: accumulated amortization
      (10,024 )     (7,581 )
        12,911       11,344  
                   
 Total
    $ 38,329     $ 41,057  

Acquired Intangible Assets.  In the current year, we acquired certain intangible assets related to the purchase of table game intellectual property and we acquired 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 $1.6 million, 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 for the year ended October 31, 2012 are being amortized over a weighted-average useful life of approximately 8 years.

Estimated amortization expense related to recorded finite lived intangible assets is as follows:

Year ending October 31,
 
(In thousands)
 
2013
  $ 8,168  
2014
    7,688  
2015
    7,014  
2016
    5,535  
2017
    4,415  
Thereafter
    5,509  
    $ 38,329  

Tradenames.  Intangibles with an indefinite life, consisting of the Stargames and CARD tradenames, are not amortized and were $24.5 million and $25.5 million as of October 31, 2012 and 2011.

We performed our annual indefinite lived intangible asset analysis of our Stargames and CARD tradenames in October 2012 in accordance with the new ASU on indefinite lived intangible asset impairment.  This analysis included an assessment of qualitative factors to determine whether it is more likely than not that the fair value of our indefinite lived intangible assets are less than their carrying amounts.  The impairment analysis involves an assessment of certain factors including, but not limited to, the results of the prior year fair value calculation, overall financial performance, and macro-economic and industry conditions. This assessment includes the determination of the likely effect of each factor on the fair value of the Stargames and CARD tradenames.  Although we believe the factors considered in the impairment analysis are reasonable, significant changes in any one of our assumptions could produce a significantly different result.  As of October 31, 2012 and 2011, based upon the results of the analysis, we concluded the Stargames and CARD tradenames were not impaired.

Goodwill.  All of our goodwill originated from the acquisitions of subsidiaries and other acquisitions of table games or intellectual property, which were accounted for in accordance with the business combination guidance.  Goodwill has been allocated to the reporting units upon acquisition. Changes in the carrying amount of goodwill as of October 31, 2012, are as follows:

Activity by Segment As Of And For The
       
Proprietary
   
Electronic
   
Electronic
       
Years Ended October 31,
 
Utility
   
Table Games
   
Table Systems
   
Gaming Machines
   
Total
 
   
(In thousands)
 
2011
                             
                               
Goodwill
  $ 42,560     $ 9,326     $ 34,188     $ 11,995     $ 98,069  
Accumulated impairments
    -       -       (22,137 )     -       (22,137 )
      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  
    $ 48,818     $ 10,253     $ 13,191     $ 13,130     $ 85,392  
                                         
2012
                                       
Goodwill
  $ 48,818     $ 10,253     $ 35,328     $ 13,130     $ 107,529  
Accumulated impairments
    -       -       (22,137 )     -       (22,137 )
      48,818       10,253       13,191       13,130       85,392  
Foreign currency translation adjustment
    (3,468 )     -       (466 )     (463 )     (4,397 )
Acquisition
    -       3,000       -       -       3,000  
Other
    -       955       -       -       955  
    $ 45,350     $ 14,208     $ 12,725     $ 12,667     $ 84,950  

We performed our annual goodwill impairment analysis in October 2012.  This analysis included an assessment of qualitative factors for the Utility, PTG and EGM reporting units to determine whether it is more likely than not that the fair value of our reporting units is less than their carrying amounts.  The impairment analysis involved an assessment of certain factors including, but not limited to, the results of the prior year fair value calculation, the movement of the company’s share price and market capitalization, overall financial performance, and macro-economic and industry conditions.  This assessment included the determination of the likely effect of each factor on the fair value of each reporting unit. For the ETS reporting unit we performed a quantitative test to estimate its fair value.  Although we believe the factors considered in the impairment analysis are reasonable, significant changes in any one of our assumptions could produce a significantly different result. Based on our annual goodwill impairment analysis, there were no goodwill impairments as of October 31, 2012, 2011 and 2010.

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 $1.0 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 October 31, 2012, we have paid approximately $11.5 million of the $12.0 million maximum amount.