Goodwill and Intangible Assets, net

12 Months Ended

Dec. 31, 2012

5. GOODWILL AND INTANGIBLE ASSETS, NET

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


	December 31,		December 31,
	2012		2011

Goodwill	$	625,357	$	575,705
Less - accumulated amortization		(5,425)		(5,425)
Goodwill, net		619,932		570,280
Intangible assets:
Customer lists and relationships		78,462		72,679
Non-compete agreements		22,236		21,002
Other		24,570		23,901
Intangible assets, at cost		125,268		117,582
Less - accumulated amortization		(109,145)		(100,757)
Intangible assets, net		16,123		16,825
Goodwill and intangible assets, net	$	636,055	$	587,105

In June 2012, we realigned our segments. As a result of the realignment of our segments, the composition of our reporting units changed. We now have four reporting units as defined by ASC 350 which are the same as our operating segments. In connection with the segment realignment, we reallocated our goodwill balances using the relative fair value approach. The changes made to the goodwill balances of our reporting units, including the realignment, during the years ended December 31, 2012 and 2011 were as follows (shown in thousands).


	CURRENT SEGMENTS
FORMER SEGMENTS	Disputes, Investigations & Economics		Financial, Risk & Compliance Advisory		Healthcare		Energy		Total
Dispute and Investigative Services	$	226,934	$	36,266	$	-	$	-	$	263,200
Business Consulting Services		2,584		10,355		115,527		66,837		195,303
Economics		61,759		-		-		-		61,759
International Consulting Services		35,181		10,341		-		4,496		50,018
Total new alignment as of December 31, 2011		326,458		56,962		115,527		71,333		570,280
Goodwill acquired		26,900		-		13,704		5,266		45,870
Adjustments		(142)		(47)		-		-		(189)
Foreign currency		3,971		-		-		-		3,971
Goodwill, net at December 31, 2012	$	357,187	$	56,915	$	129,231	$	76,599	$	619,932

	CURRENT SEGMENTS
FORMER SEGMENTS	Disputes, Investigations & Economics		Financial, Risk & Compliance Advisory		Healthcare		Energy		Total
Dispute and Investigative Services	$	224,291	$	33,682	$	-	$	-	$	257,973
Business Consulting Services		-		12,986		113,193		66,837		193,016
Economics		61,759		-		-		-		61,759
International Consulting Services		33,428		10,341		-		4,485		48,254
Total new alignment as of December 31, 2010		319,478		57,009		113,193		71,322		561,002
Goodwill acquired		7,757		-		2,334		11		10,102
Adjustments		(142)		(47)		-		-		(189)
Foreign currency		(635)		-		-		-		(635)
Goodwill, net at December 31, 2011	$	326,458	$	56,962	$	115,527	$	71,333	$	570,280

During the three months ended June 30, 2012, in conjunction with the realignment and our annual goodwill impairment test, we completed the first step of our annual goodwill impairment test for our goodwill balance as of May 31, 2012 and determined that the estimated fair value of each reporting unit before and after the realignment exceeded its net asset carrying value. The excess of estimated fair value over net asset carrying value of each of our reporting units approximated 18% for Disputes, Investigations & Economics, 37% for Financial, Risk & Compliance Advisory, 17% for Healthcare and 32% for Energy. The key assumptions used in our annual impairment test remain generally unchanged and included: profit margin improvement generally consistent with our longer-term historical performance; revenue growth rates consistent with our longer-term historical performance also considering our near term investment plans and growth objectives; discount rates that were determined based on comparables for our peer group; and cost of capital based on our historical experience. Each reporting unit’s estimated fair value depends on various factors including its expected ability to achieve profitable growth. Accordingly, there was no indication of impairment of our goodwill and therefore the second step was not performed.

We evaluate results and projections periodically throughout the year to consider the impact of changes to our business and market conditions on our Goodwill valuation. At December 31, 2012, we considered our most recent projections, included the recently announced sale of a portion of our Disputes, Investigations & Economics segment which included certain economic experts and their staff (see Note 18 – Subsequent Events) and the acquisition of AFE. In addition, we considered the impact of the recent settlements between many banks and government regulators on our mortgage servicing review engagements. We continue to monitor our stock price in relation to our book value. Despite trading below book value for a certain period during the fourth quarter the decline was consistent with the overall market. At December 31, 2012 our stock was trading above book value.

Based on our analysis, there was no indication of impairment related to our goodwill or intangible assets, and therefore, we did not perform the first step of the goodwill impairment test.

There can be no assurance that goodwill or intangible assets will not be impaired in the future. We will continue to monitor the factors and key assumptions used in determining the fair value of each of our reporting units, as further discussed below.

As we review our portfolio of services in the future, we may exit certain markets or reposition certain service offerings within our business. Consistent with past evaluations, further evaluations may result in redefining our operating segments and may impact a significant portion of one or more of our reporting units. As noted above, if such actions occur, they may be considered triggering events that would result in our performing an interim impairment test of our goodwill and an impairment test of our intangible assets.

For further information on our goodwill and intangible assets see Note 2 – Significant Accounting Policies.

For the businesses acquired (see Note 3 — Acquisitions), we have allocated the purchase prices, including amounts assigned to goodwill and intangible assets, and made estimates of their related useful lives. The amounts assigned to intangible assets for the businesses acquired include non-compete agreements, customer lists and relationships, backlog revenue and trade names.

Our intangible assets have estimated useful lives ranging up to nine years which approximate the estimated periods of consumption. We will amortize the remaining net book values of intangible assets over their remaining useful lives. At December 31, 2012, our intangible assets consisted of the following (amounts shown in thousands, except year data):


	Weighted Average
Category	Remaining Years		Amount
Customer lists and relationships, net		3.7	$	12,329
Non-compete agreements, net		4.4		1,615
Other intangible assets, net		2.7		2,179
Total intangible assets, net		3.6	$	16,123

Total amortization expense for the years ended December 31, 2012, 2011 and 2010 was $6.8 million, $8.7 million and $12.4 million, respectively. Below is the estimated annual aggregate amortization expense to be recorded in future years related to intangible assets at December 31, 2012 (shown in thousands):


Year Ending December 31,	Amount
2013	$	6,610
2014		4,622
2015		2,663
2016		1,255
2017		585
Thereafter		388
Total	$	16,123

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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