Quarterly report pursuant to Section 13 or 15(d)

Goodwill and Intangible Assets

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Goodwill and Intangible Assets
9 Months Ended
Jun. 30, 2013
Goodwill and Intangible Assets [Abstract]  
Goodwill and Intangible Assets
5. Goodwill and Intangible Assets

Goodwill

Goodwill represents the excess of cost over the fair value of the net assets acquired from various acquisitions. Goodwill is not amortized. The Company performs a goodwill impairment test annually, by reporting unit, in the fourth quarter of the fiscal year, or whenever potential impairment triggers occur. The Company performs a qualitative impairment assessment before proceeding to the two-step impairment test. If the Company determines, on the basis of quantitative factors, that the fair value of the indefinite-lived intangible asset is more likely than not (i.e. a likelihood of more than 50 percent) not impaired, the entity would not need to calculate the fair value of the asset. Should the two-step process be necessary, the first step of the impairment test identifies potential impairment by comparing the fair value of a reporting unit to its carrying value, including goodwill. In applying a fair-value-based test, estimates are made of the expected future cash flows to be derived from the reporting unit. Similar to the review for impairment of other long-lived assets, the resulting fair value determination is significantly impacted by estimates of future margins, capital needs, economic trends and other factors. If the carrying value of the reporting unit exceeds its fair value, the second step of the impairment test is performed to measure the amount of impairment loss, if any. The second step of the impairment test compares the implied fair value of the reporting unit goodwill with the carrying amount of that goodwill. An impairment loss would be recognized to the extent the carrying value of goodwill exceeds its implied fair value. There was no impairment recorded during the three and nine month periods ended June 30, 2013 and 2012.

Intangible Assets

As of June 30, 2013
 
( In Thousands)
Cost
Accumulated
Amortization
Loss on Impairment
of Intangible Assets
Net
Book Value
 
Customer Relationships
$
2,690
$
737
$
-
$
1,953
Trade Name
17
6
-
11
$
2,707
 
$
743
$
-
$
1,964

As of September 30, 2012
(In Thousands)
Cost
Accumulated
Amortization
Loss on Impairment
of Intangible Assets
Net
Book Value
 
 
 
 
    Non-Compete
$
89
$
48
$
41
$
-
    Customer Relationships
2,913
662
60
2,191
    Management Agreement
1,396
270
1,126
-
    Trade Name
17
4
-
13
$
4,415
$
984
$
1,227
$
2,204

Amortization expense was approximately $80,000 and $240,000 for the three and nine months ended June 30, 2013, respectively and was approximately $99,000 and $299,000 for the three and nine months ended June 30, 2012, respectively.

The non-compete agreements and trade names are amortized on a straight – line basis over the estimated useful life of five years. Customer relationships are amortized based on the future undiscounted cash flows over estimated remaining useful lives of three to ten years. The management agreement intangible was being amortized over the five year term of the agreement. Over the next five years, annual amortization expense for these finite life intangible assets will be approximately $393,000 in 2013, $376,000 in 2014, $359,000 in 2015, $340,000 in 2016 and $322,000 in 2017 and $174,000 thereafter.

Long-lived assets, such as purchased intangibles subject to amortization, are reviewed for impairment when events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company regularly evaluates whether events and circumstances have occurred that indicate possible impairment and relies on a number of factors, including operating results, business plans, economic projections, and anticipated future cash flows. The Company uses an estimate of the future undiscounted net cash flows of the related asset or asset group over the remaining life in measuring whether the assets are recoverable.

During the three and nine month periods ended June 30, 2013 and 2012, the Company did not record any impairment of intangible assets.

During the year ended, September 30, 2012, the Company recorded an impairment charge of approximately $101,000 for the remaining unamortized amount of the non-compete and a certain amount of the customer relationship intangible asset related to the agricultural operation. In addition, the Company recorded an impairment charge of approximately $173,000 related to the goodwill of the agriculture operation. The impairment charge represented the difference between the fair value and the carrying value of the intangible assets.   The Agricultural Division has been operating at a loss since the loss of a major customer in 2012 and management has decided that the Agricultural Services Division was not a core business in the future operations of  the Company and has discontinued operations as of July 7, 2013 and begun the process of liquidation.