Quarterly report pursuant to Section 13 or 15(d)

Goodwill and Intangible Assets

Goodwill and Intangible Assets
3 Months Ended
Dec. 31, 2015
Notes to Financial Statements  
5. Goodwill and Intangible Assets



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. 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 month periods ended December 31, 2015 and 2014.


Intangible Assets


As of December 31, 2015


( In Thousands)   Cost    



    Net Book
Customer Relationships   $ 9,798     $ 1,805     $ 7,993  
Trade Name     1,813       102       1,711  
Non-compete Agreement     818       48       770  
    $ 12,429     $ 1,955     $ 10,474  


As of September 30, 2015


(In Thousands)   Cost    



    Net Book
Customer Relationships   $ 5,232     $ 1,557     $ 3,675  
Trade Name     1,057       56       1,001  
Non-compete Agreement     225       5       220  
    $ 6,514     $ 1,618     $ 4,896  


Amortization expense was approximately $337,000 and $85,000 for the three months ended December 31, 2015 and 2014, respectively.


The trade names are amortized on a straight – line basis over the estimated useful life of ten years. Customer relationships are amortized based on the future undiscounted cash flows or straight – line basis over estimated remaining useful lives of five to ten years. Non-compete agreements are amortized based on a straight-line basis over the term of the non-compete agreement. Over the next five years and thereafter, annual amortization expense for these finite life intangible assets will total approximately $10,474,000, as follows: fiscal 2016 - $1,378,000 fiscal 2017 - $1,272,000, fiscal 2018 - $1,275,000, fiscal 2019 – $1,279,000, fiscal 2020 – $1,267,000 and thereafter - $4,003,000.


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.