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Ballys Corp

For the period ended Mar 31, 2024. Filed May 3, 2024.

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About this filing

A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.

Mar 31, 2024 · Filed May 3, 2024

BALY$11.99-3.2%Stored close · as of Nov 9, 2026

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Goodwill and Intangible Assets

  1. GOODWILL AND INTANGIBLE ASSETS

The change in carrying value of goodwill by reportable segment for the three months ended March 31, 2024 is as follows (in thousands):

Casinos & ResortsInternational InteractiveNorth America InteractiveTotal
Goodwill as of December 31, 2023(1)$313,493$1,586,590$35,720$1,935,803
Effect of foreign exchange—(20,647)(95)(20,742)
Purchase accounting adjustments on prior year business acquisition(208)——(208)
Goodwill as of March 31, 2024(1)$313,285$1,565,943$35,625$1,914,853

(1) Amounts are shown net of accumulated goodwill impairment charges of $5.4 million and $140.4 million for Casinos & Resorts and North America Interactive, respectively.

The change in intangible assets, net for the three months ended March 31, 2024 is as follows (in thousands):

Intangible assets, net as of December 31, 2023$1,871,428
Effect of foreign exchange(13,582)
Internally developed software12,325
Other intangibles acquired2,727
Less: Accumulated amortization(60,260)
Intangible assets, net as of March 31, 2024$1,812,638

The Company’s identifiable intangible assets consist of the following:

March 31, 2024
(in thousands, except years)Gross Carrying AmountAccumulatedAmortizationNet
Amortizable intangible assets:
Commercial rights - Sinclair(1)$315,847$(97,692)$218,155
Trade names37,375(19,480)17,895
Hard Rock license8,000(2,364)5,636
Customer relationships960,366(345,407)614,959
Developed technology264,206(94,359)169,847
Internally developed software72,752(15,397)57,355
Gaming licenses46,316(14,152)32,164
Other11,491(4,131)7,360
Total amortizable intangible assets1,716,353(592,982)1,123,371
Intangible assets not subject to amortization:
Gaming licenses586,971—586,971
Trade names99,781—99,781
Other2,515—2,515
Total unamortizable intangible assets689,267—689,267
Total intangible assets, net$2,405,620$(592,982)$1,812,638

(1) Commercial rights intangible asset in connection with the Framework Agreement. Refer to Note 2 “Summary of Significant Accounting Policies” for further information.

December 31, 2023
(in thousands, except years)Gross Carrying AmountAccumulatedAmortizationNet
Amortizable intangible assets:
Commercial rights - Sinclair(2)$315,847$(89,901)$225,946
Trade names37,042(18,125)18,917
Hard Rock license8,000(2,303)5,697
Customer relationships974,286(314,053)660,233
Developed technology267,927(86,119)181,808
Internally developed software61,687(13,091)48,596
Gaming licenses45,008(11,964)33,044
Other11,505(3,621)7,884
Total amortizable intangible assets1,721,302(539,177)1,182,125
Intangible assets not subject to amortization:
Gaming licenses586,971—586,971
Trade names100,544—100,544
Other1,788—1,788
Total unamortizable intangible assets689,303—689,303
Total intangible assets, net$2,410,605$(539,177)$1,871,428

(2) See note (1) above.

Amortization of intangible assets was approximately $60.3 million and $55.9 million for the three months ended March 31, 2024 and 2023, respectively.

The following table reflects the remaining amortization expense associated with the finite-lived intangible assets as of March 31, 2024:

(in thousands)
Remaining 2024$173,834
2025229,551
2026227,776
2027226,743
2028170,953
Thereafter94,514
Total$1,123,371
  1. DERIVATIVE INSTRUMENTS

The Company utilizes derivative instruments in order to mitigate interest rate and currency exchange rate risk in accordance with its financial risk and liability management policy.

In 2023, the Company entered into a series of interest rate contracts and cross currency swap derivative transactions with multiple bank counterparties in order to synthetically convert a notional aggregate amount of $500.0 million of the Company’s USD denominated variable rate Term Loan Facility, as disclosed in Note 14 “Long-Term Debt,” into fixed rate debt over five years and $200 million of the Term Loan Facility, to an equivalent GBP denominated floating rate instrument over three years. These contracts mature in October, 2028 and 2026, respectively.

Derivative Instruments Designated as Hedging Instruments

Net Investment Hedges

Cross Currency Swaps - The Company is exposed to fluctuations in foreign exchange rates on investments it holds in its European foreign entities. The Company uses fixed and fixed-cross-currency swaps to hedge its exposure to changes in the foreign exchange rate on its foreign investment in Europe and their exposure to changes in the EUR-GBP exchange rate. Currency forward agreements involve fixing the USD-EUR exchange rate for delivery of a specified amount of foreign currency on a specified date. The currency forward agreements are typically cash settled in USD for their fair value at or close to their settlement date. Cross-currency swaps involve the receipt of functional-currency-fixed-rate amounts from a counterparty in exchange for the Company making foreign-currency-fixed-rate payments over the life of the agreement. These derivative arrangements qualify as net investment hedges under ASC 815, with the gain or loss resulting from changes in the spot value of the derivative reported in other comprehensive income (loss). Amounts are reclassified out of other comprehensive income (loss) into earnings when the hedged net investment is either sold or substantially liquidated. Additionally, the accrual of foreign currency and USD denominated coupons will be recognized in “Interest expense, net” in the condensed consolidated statements of operations. Refer to Note 11 “Fair Value Measurements” and Note 16 “Stockholders’ Equity” for further information.

The following tables summarize the Company’s net investment hedges as of March 31, 2024 and December 31, 2023 (in thousands):

Net Investment HedgesNotional SoldNotional Purchased
Cross currency swaps€461,595£387,531
Cross currency swaps£546,759$700,000

Cash Flow Hedges

Interest Rate Contracts - The Company’s objectives in using interest rate derivatives are to hedge its exposure to variability in cash flows on a portion of its floating-rate debt, to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish these objectives, the Company primarily uses interest rate swaps and collars as part of its financial risk and liability management policy. The Company’s interest rate swaps and collars are designated as cash flow hedges under ASC 815. The changes in the fair value of these instruments are recorded as a component of accumulated other comprehensive income (loss) and reclassified into “Interest expense, net” in the condensed consolidated statements of operations in the same period in which the hedged interest payments associated with the Company’s borrowings are recorded. Refer to Note 11 “Fair Value Measurements” and Note 16 “Stockholders’ Equity” for further information.

The following table summarizes the Company’s cash flow hedges as of March 31, 2024 and December 31, 2023 (in thousands):

Cash Flow HedgesNotional AmountIndexCapFloor(1)
Interest rate contracts - swaps$500,000US - SOFR$—$—
Interest rate contracts - collars$500,000US - SOFR4.25%3.22%

(1) Weighted average rate.

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