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Goodwill and Other Intangible Assets

12 Months Ended

Sep. 30, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

6. Goodwill and Other Intangible Assets

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

	September 30,
	2018		2017
Indefinite useful lives:
Goodwill	$	44,425	$	43,866
Licenses		67,523		70,644
Tradename		2,215		2,215
		114,163		116,725

	Amortization
	Period
Definite useful lives:
Discounted leases		18 & 6 years		108		116
Non-compete agreements		5 years		588		681
Software		5 years		834		768
Distribution agreement		3 years		264		-
				1,794		1,565
Total goodwill and other intangible assets			$	115,957	$	118,290

	2018								2017
	Definite- Lived Intangibles			Indefinite- Lived Intangibles			Goodwill		Definite- Lived Intangibles			Indefinite- Lived Intangibles			Goodwill
Beginning balance	$	1,565		$	72,859		$	43,866	$	917		$	51,849		$	45,847
Intangibles acquired		483			-			559		865			22,411			2,716
Impairment		-			(3,121	)		-		-			(1,401	)		(4,697	)
Amortization		(254	)		-			-		(217	)		-			-
Ending balance	$	1,794		$	69,738		$	44,425	$	1,565		$	72,859		$	43,866

As of September 30, 2018 and 2017, the accumulated impairment balance of indefinite-lived intangibles was $5.9 million and $6.9 million, respectively, while the accumulated impairment balance of goodwill was $3.9 million and $5.4 million, respectively. Future amortization expense related to definite-lived intangible assets that are subject to amortization at September 30, 2018 is: 2019 - $466,000; 2020 - $443,000; 2021 - $367,000; 2022 - $261,000; 2023 - $186,000; and thereafter - $71,000.

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 method of income approach 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, 2018, the Company recognized a $3.1 million impairment related to three clubs’ SOB licenses. During the year ended September 30, 2017, the Company recognized an impairment loss of $4.7 million related to the goodwill of four reporting units, including one held for sale, as well as an impairment loss of $1.4 million related to two locations’ SOB licenses. The Company impaired one reporting unit during the year ended September 30, 2016 amounting to $2.1 million for indefinite-lived intangibles. See Note 15.