United Parks & Resorts Inc. Goodwill & Intangibles Disclosure
9. GOODWILL, NET
2017 Interim Impairment Test— Due to financial performance particularly late in the second quarter of 2017 at the Company’s SeaWorld Orlando park, the Company determined a triggering event occurred that required an interim goodwill impairment test for its SeaWorld Orlando reporting unit as of June 30, 2017. Based on financial performance and the resulting impact on projections at that time of future cash flows for this reporting unit, the Company concluded that the reporting unit’s goodwill was fully impaired and recorded a non-cash goodwill impairment charge of $269.3 million in the accompanying consolidated statement of comprehensive income (loss) during the year ended December 31, 2017. The estimated fair value for the SeaWorld Orlando reporting unit was determined using the income approach and represents a Level 3 fair value measurement measured on a non-recurring basis in the fair value hierarchy due to the Company’s use of internal projections and unobservable measurement inputs.
The changes in the carrying amount of goodwill for each reporting unit for the years ended December 31, 2018 and 2017 are as follows:
|
|
|
SeaWorld Orlando |
|
|
Discovery Cove |
|
|
Total |
|
|||
|
|
|
(In thousands) |
|
|||||||||
|
Gross carrying amount at January 1, 2017 |
|
$ |
269,332 |
|
|
$ |
66,278 |
|
|
$ |
335,610 |
|
|
Accumulated impairment loss at January 1, 2017 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Net carrying amount at January 1, 2017 |
|
|
269,332 |
|
|
|
66,278 |
|
|
|
335,610 |
|
|
Goodwill impairment charge |
|
|
(269,332 |
) |
|
|
— |
|
|
|
(269,332 |
) |
|
Net carrying amount at December 31, 2017 |
|
|
— |
|
|
|
66,278 |
|
|
|
66,278 |
|
|
Changes in goodwill |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Net carrying amount at December 31, 2018 |
|
$ |
— |
|
|
$ |
66,278 |
|
|
$ |
66,278 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual Impairment Test—The Company performed a qualitative assessment on its remaining goodwill at December 1, 2018 and 2017, which now relates only to its Discovery Cove reporting unit, and concluded that it was more-likely-than-not that goodwill was not impaired.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2018 | Mar 1, 2019 | Showing above |
| 2016 | Mar 1, 2017 | |
| 2015 | Feb 26, 2016 | |
About Goodwill & Intangibles Disclosures
Goodwill and intangible asset disclosures reveal the premium paid in acquisitions and how management assesses whether that premium retains its value. Since goodwill is no longer amortized under US GAAP, the annual impairment test is the only mechanism that adjusts carrying values downward — making the assumptions behind that test critically important for investors.
Key signals: a history of goodwill impairments suggests management consistently overpays for acquisitions. Watch the gap between reporting unit fair value and carrying amount — when fair value exceeds carrying amount by less than 10-20%, a small decline in business performance could trigger a write-down. For finite-lived intangibles, examine useful life assumptions across customer relationships, technology, and trade names; aggressive estimates inflate near-term earnings. Compare total intangibles-to-total-assets ratios against peers to assess acquisition dependency. Rising goodwill as a percentage of equity can signal balance sheet fragility.