Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND OTHER INTANGIBLE ASSETS

The components of Goodwill and other intangible assets, net were as follows:



	December 31, 2018		December 31, 2017
Goodwill	$	77,568	$	77,059

Indefinite life intangibles:
Intangible asset associated with benefit under the MSA	107,511		107,511
Trademark - Douglas Elliman	80,000		80,000

Intangibles with a finite life, net	1,532		3,138

Total goodwill and other intangible assets, net	$	266,611	$	267,708

Goodwill is evaluated for impairment annually or whenever we identify certain triggering events or circumstances that would more likely than not reduce the fair value of a reporting unit below its carrying amount. Events or circumstances that might indicate an interim evaluation is warranted include, among other things, unexpected adverse business conditions, macro and reporting unit specific economic factors (for example, interest rate and foreign exchange rate fluctuations, and loss of key personnel), supply costs, unanticipated competitive activities, and acts by governments and courts.

The Company follows ASC 350, Intangibles -- Goodwill and Other, included in ASU 2011-08, Testing Goodwill for Impairment. The Company elected to bypass the qualitative assessment and perform the quantitative assessment for the year ended December 31, 2018. No impairment was indicated as a result of this testing.

Other intangible assets and contract liabilities assumed were as follows:



	Useful Lives in Years	December 31, 2018			December 31, 2017
Intangible asset associated with benefit under the MSA	Indefinite	$	107,511		$	107,511

Trademark - Douglas Elliman	Indefinite	80,000			80,000

Favorable leases	1 - 10	13,444			13,444
Other intangibles	1 - 5	1,724			6,999
		15,168			20,443
Less: Accumulated amortization on amortizable intangibles		(13,636		)	(17,305		)
Other intangibles, net		$	1,532		$	3,138

Contract liabilities assumed:

Unfavorable leases	1 - 10	$	4,022		$	4,022
Less: Accumulated amortization on unfavorable leases		(3,076		)	(2,706		)
Unfavorable leases, net		$	946		$	1,316

The intangible asset associated with the benefit under the MSA relates to the market share payment exemption of The Medallion Company Inc. (now known as Vector Tobacco Inc.), acquired in April 2002, under the MSA, which states payments under the MSA continue in perpetuity. As a result, the Company believes it will realize the benefit of the exemption for the foreseeable future.

The fair value of the intangible asset associated with the benefit under the MSA is calculated using discounted cash flows. This approach involves two steps: (i) estimating future cash savings due to the payment exemption under the MSA and (ii) and discounting the resulting cash flow savings to determine fair value. This fair value is then compared with the carrying value of the intangible asset associated with the benefit under the MSA. To the extent that the carrying amount exceeds the implied fair value of the intangible asset, an impairment loss is recognized. The Company performed its impairment test for the year ended December 31, 2018 and no impairment was noted.

The trademark intangible is attributed to the acquisition of the Douglas Elliman brand name which the Company plans to continue using for the foreseeable future. The fair value of the intangible asset associated with the Douglas Elliman trademark is calculated using a “relief from royalty payments” method. This approach involves two steps: (i) estimating reasonable royalty rates for its trademark associated with the Douglas Elliman trademark and (ii) applying these royalty rates to a net sales stream and discounting the resulting cash flows to determine fair value. This fair value is then compared with the carrying value of the trademark. The Company performed the quantitative assessment for the year ended December 31, 2018 and no impairment was noted.

The fair value of the other intangibles with finite lives includes favorable leases arising from leases with terms that are less than market value assumed in the business combination. Other intangibles with finite lives also includes backlog and listing inventory for Development sales.

The unfavorable leases were from lease terms that exceeded market and gave rise to a liability that were assumed in the business combination. The unfavorable leases are grouped with long-term Other liabilities.

Amortization of other intangibles was $806 and $871 for the years ended December 31, 2018 and 2017, respectively. For the years ended December 31, 2018 and December 31, 2017, respectively $1,175 and $1,373 were taken as rent expense for amortization of favorable leases and $369 and $502 were taken as offsets to rent expense for amortization of unfavorable leases. Amortization expense is estimated to be $71, $37, $82, $20 and $3 during the years ended December 31, 2019 through 2021, December 31, 2023 and thereafter, respectively, and amortization income from unfavorable lease contracts of $30 during the year ended December 31, 2022.