XML 33 R18.htm IDEA: XBRL DOCUMENT v3.20.4
Goodwill and Other Intangible Assets
12 Months Ended
Sep. 30, 2020
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill and Other Intangible Assets

9. Goodwill and Other Intangible Assets

 

Goodwill and other intangible assets consisted of the following (in thousands):

 

   September 30, 
   2020   2019 
Indefinite useful lives:          
Goodwill  $45,686   $53,630 
Licenses   70,332    72,597 
Tradename   2,215    2,215 
    118,233    128,442 

 

    Amortization Period            
Definite useful lives:                    
Discounted leases   18 & 6 years     93       101  
Non-compete agreements   5 years     362       565  
Software   5 years     23       315  
Distribution agreement   3 years     52       158  
          530       1,139  
Total goodwill and other intangible assets       $ 118,763     $ 129,581  

 

   2020   2019 
   Definite- Lived Intangibles   Indefinite- Lived Intangibles   Goodwill   Definite- Lived Intangibles   Indefinite- Lived Intangibles   Goodwill 
Beginning balance  $1,139   $74,812   $53,630   $1,794   $69,738   $43,591 
Acquisitions   -    -    -    243    5,252    11,677 
Impairment   -    (2,265)   (7,944)   -    (178)   (1,638)
Amortization   (609)   -    -    (898)   -    - 
Ending balance  $530   $72,547   $45,686   $1,139   $74,812   $53,630 

 

As of September 30, 2020 and 2019, the accumulated impairment balance of indefinite-lived intangibles was $8.4 million and $6.1 million, respectively, while the accumulated impairment balance of goodwill was $14.3 million and $6.3 million, respectively. Future amortization expense related to definite-lived intangible assets that are subject to amortization at September 30, 2020 is: 2021 - $263,000; 2022 - $134,000; 2023 - $59,000; 2024 - $11,000; 2025 - $7,000; and thereafter - $56,000.

 

Indefinite-lived intangible assets consist of sexually oriented business licenses and tradename, which were obtained as part of acquisitions. These licenses are the result of zoning ordinances, thus are valid indefinitely, subject to filing annual renewal applications, which are done at minimal costs to the Company. The discounted cash flow of the income approach method was used in calculating the value of these licenses in a business combination, while the relief-from-royalty method was used in calculating the value of tradenames. During the fiscal year ended September 30, 2020, the Company recognized a $2.3 million impairment related to two clubs’ SOB licenses and a $7.9 million impairment related to the goodwill of seven reporting units (see Note 3). During the fiscal year ended September 30, 2019, the Company recognized a $178,000 impairment related to one club’s SOB license and a $1.6 million impairment related to the goodwill of four reporting units. During the fiscal year ended September 30, 2018, the Company recognized a $3.1 million impairment related to three clubs’ SOB licenses and an $834,000 impairment related to the goodwill of two reporting units. See Note 18.

 

 

RCI HOSPITALITY HOLDINGS, INC.

Notes to Consolidated Financial Statements