NOTE 3: GOODWILL

The following table presents details of the Company's goodwill:


		As of December 31,
		2014		2013
		($ in thousands)
Beginning of year, Goodwill - Unified Communications	$	9,006	$	9,121
Disposals		-		(115	)
End of year, Goodwill - Unified Communications	$	9,006	$	9,006

For its 2014 goodwill impairment testing, the Company elected not to perform a qualitative analysis, and instead, performed the first step quantitative analysis of the goodwill impairment test in the current year, primarily due to the UC segment's historical operating losses that have been generated since the goodwill was acquired in August 2011. Management believes that these operating losses were a result of the investments made to support the future growth of the UC segment and are not indicative of the future operating performance of the UC segment.

The estimated fair value of the Company's UC reporting unit is based on a weighting of the income and market approaches, with significant weighting given to the income approach. The Company principally relied on a discounted cash flow analysis to determine the fair value of the UC reporting unit, which considers forecasted cash flows discounted at an appropriate discount rate. The Company believes that market participants would use a discounted cash flow analysis to determine the fair value of its reporting units in a sale transaction. The annual goodwill impairment test requires us to make a number of assumptions and estimates concerning future levels of revenue growth, operating margins, depreciation, amortization and working capital requirements, which are based upon the Company's long-range plan. The Company's long-range plan is updated as part of its annual planning process and is reviewed and approved by management. The growth rates are based upon the UC segment's historical performance and the future expectations of the unified communications industry. The future profitability is based upon the Company's estimated expenses required to obtain and support the estimated revenue growth, and the UC segment's ability to leverage its current infrastructure. The UC segment and unified communications industry have experienced strong growth in recent years. The discount rate is an estimate of the overall after-tax rate of return required by a market participant, whose weighted average cost of capital includes both equity and debt, including a risk premium. While the Company uses the best available information to prepare its cash flow and discount rate assumptions, actual future cash flows or market conditions could differ significantly resulting in future impairment charges related to recorded goodwill balances. In order to evaluate the sensitivity of the goodwill impairment test to changes in the fair value calculations, the Company performed various sensitivity analyses and in each scenario, the fair value of the Company's UC reporting segment significantly exceeded the carrying value.