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Goodwill and Other Intangible Assets
 12 Months Ended
Sep. 30, 2021
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill and Other Intangible Assets

8. Goodwill and Other Intangible Assets

 

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

 

   2021   2020 
   September 30, 
   2021   2020 
Indefinite useful lives:          
Goodwill  $39,379   $45,686 
Licenses   65,186    70,332 
Tradename and domain name   2,238    2,215 
Indefinite Intangible Assets, Net, Total   106,803    118,233 

 

   Amortization Period        
Definite useful lives:             
Discounted leases  18 & 6 years   86    93 
Non-compete agreements  5 years   182    362 
Software  5 years   132    23 
Distribution agreement  3 years   -    52 
       400    530 
Total goodwill and other intangible assets     $107,203   $118,763 

 

   2021   2020 
   Definite- Lived Intangibles   Indefinite- Lived Intangibles   Goodwill   Definite- Lived Intangibles   Indefinite- Lived Intangibles   Goodwill 
Beginning balance  $530   $72,547   $45,686   $1,139   $74,812   $53,630 
Acquisitions   128    173    -    -    -    - 
Impairment   -    

(5,296

)   (6,307)   -    (2,265)   (7,944)
Amortization   (258)   -    -    (609)   -    - 
Ending balance  $400   $

67,424

   $39,379   $530   $72,547   $45,686 

 

As of September 30, 2021 and 2020, the accumulated impairment balance of indefinite-lived intangibles was $13.7 million and $8.4 million, respectively, while the accumulated impairment balance of goodwill was $20.6 million and $14.3 million, respectively. Future amortization expense related to definite-lived intangible assets that are subject to amortization at September 30, 2021 is: 2022 - $138,000; 2023 - $60,000; 2024 - $11,000; 2025 - $8,000; 2026 - $7,000; and thereafter - $176,000.

 

Indefinite-lived intangible assets consist of sexually oriented business licenses and tradenames, 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, 2021, the Company recognized a $5.3 million impairment related to SOB licenses of three clubs and a $6.3 million related to goodwill of seven clubs. 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.

 

 

RCI HOSPITALITY HOLDINGS, INC.

Notes to Consolidated Financial Statements