4. Goodwill

	December 31,		December 31,
	2013		2012
	(in thousands)
Opening goodwill	$	315,441	$	253,393
Current year acquisitions		36,922		55,759
Prior year acquisitions		-		1,382
Foreign exchange movement		5,160		4,907
Closing goodwill	$	357,523	$	315,441

The Company has made a number of strategic acquisitions since its inception to enhance its capabilities and experience in certain areas of the clinical development process. Goodwill arising on acquisition represents the excess of the cost of acquired entities over the net amounts assigned to assets acquired and liabilities assumed. Goodwill primarily comprises acquired workforce in place which does not qualify for recognition as an asset apart from goodwill.

The Company tests goodwill annually for any impairments or whenever events occur which may indicate impairment. The results of the Company’s goodwill impairment testing during the year ended December 31, 2013, indicated the existence of sufficient headroom such that a reasonably possible change to the key assumptions used would be unlikely to result in an impairment of the related goodwill.

(a) Acquisition of Clinical Trial Services Division of Cross Country Healthcare, Inc.

On February 15, 2013 the Company acquired the clinical trial services division of Cross Country Healthcare Inc. for an initial cash consideration of $51.9 million. The agreement provided for further consideration of up to $3.75 million which could become payable if certain performance milestones were achieved during the period ended December 31, 2013. Cross Country Healthcare’s Clinical Trial Services division includes US resourcing providers, ClinForce and Assent Consulting, whose services include contract staffing, permanent placement and functional service provision. The division also includes AKOS, a leading US and EU provider of pharmacovigilance and drug safety services. ClinForce and Assent will be combined with ICON’s functional service provision (“FSP”) division, DOCS, creating a leader in global resourcing and FSP, while AKOS will enhance the services offered by ICON’s medical and safety services team. Certain operating margin perfomance milestones in relation to ClinForce and Assent Consulting were not achieved during the period ended December 31, 2013 resulting in a reduction of $3.75 million to the contingent consideration.

The acquisition agreement also provided for certain working capital targets to be achieved by the clinical trial services division of Cross Country Healthcare, Inc on completion. In October 2013 the Company received $0.2 million on completion of this review.

The acquisition of the clinical trial services division of Cross Country Healthcare, Inc has been accounted for as a business combination in accordance with FASB ASC 805 Business Combinations. The following table summarizes the estimated fair values of the assets acquired and the liabilities assumed:

	February 15
	2013
	(in thousands)
Property, plant and equipment	$	339
Goodwill*		36,922
Intangible asset – customer relationships		3,300
Intangible asset – order backlog		600
Cash and cash equivalents		1,039
Accounts receivable		9,200
Unbilled revenue		2,128
Prepayments and other current assets		465
Non-current assets		6
Other liabilities		(2,285	)
Non-current other liabilities		(16	)

Net assets acquired	$	51,698

Cash consideration	$	51,897
Working capital adjustment		(199	)
Net assets acquired	$	51,698

* Goodwill represents the acquisition of an established workforce with experience in the clinical research industry, thereby allowing the Company to enhance its capabilities in global resourcing and FSP and also medical and safety services. Goodwill related to the US portion of the business acquired is tax deductible.

The proforma effect of the clinical trial services division of Cross Country Healthcare, Inc acquisition if completed on January 1, 2012 would have resulted in net revenue, net income and earnings per share for the fiscal years ended December 31, 2012 and December 31, 2013 as follows:

	Year Ended
	December 31,
	2013		2012
	(in thousands)
Net revenue	$	1,343,996	$	1,182,734
Net income	$	103,133	$	58,944
Basic earnings per share	$	1.69	$	0.98
Diluted earnings per share	$	1.66	$	0.98

(b) Acquisition of PriceSpective

On February 28, 2012 the Company acquired 100% of the common stock of PriceSpective LLC (PriceSpective) strategy consulting company for an initial cash consideration of $37.1 million. Headquartered in Philadelphia, and with offices in London, Los Angeles, San Diego, Raleigh and Boston, PriceSpective is a premier consultancy that has a strong reputation for excellence in strategic pricing, market access, Health Economics and Outcomes Research (“HEOR”), due diligence support and payer engagement services. Since PriceSpective’s incorporation in 2003, it has developed strategies for dozens of new product launches, and hundreds of development and in-market products, across 40+ disease areas. Further consideration of up to $15.0 million was payable if certain performance milestones were achieved in respect of periods up to December 31, 2012. On August 13, 2012 the Company paid $5.0 million in relation to performance milestones for the year ended December 31, 2011. On May 29, 2013 the Company paid $10.0 million in relation to the remaining performance milestones for the year ended December 31, 2012.

The following table summarizes the Company’s estimates of the fair values of assets acquired and the liabilities assumed:

	February 28
	2012
	(in thousands)
Property, plant and equipment	$	256
Goodwill*		42,247
Intangible asset – customer relationships		10,237
Intangible asset – order backlog		405
Intangible asset – non-compete arrangements		392
Cash and cash equivalents		2,311
Accounts receivable		2,662
Unbilled revenue		1,140
Other current assets		236
Current liabilities		(7,788	)
Liability arising from contingent consideration arrangement		(15,000	)
Net assets acquired	$	37,098

Cash consideration	$	37,199
Working capital adjustment		(101	)
Contingent consideration		15,000
Amount of total consideration		52,098
Liabilities included in preliminary purchase price allocation re contingent consideration		(15,000	)
Net assets acquired	$	37,098

* Goodwill represents the acquisition of an established workforce with experience in strategic pricing, market access, HEOR, due diligence support and payer engagement services. Goodwill related to the US portion of the business acquired is tax deductible.

The proforma effect of the PriceSpective acquisition if completed on January 1, 2011 would have resulted in net revenue, net income and earnings per share for the fiscal years ended December 31, 2011 and December 31, 2012 as follows:

	Year Ended
	December 31,
	2012		2011
	(in thousands)
Net revenue	$	1,118,410	$	964,388
Net income	$	55,931	$	25,363
Basic earnings per share	$	0.93	$	0.42
Diluted earnings per share	$	0.93	$	0.42

On February 15, 2012 the Company acquired 100% of the common stock of BeijingWits Medical Consulting Co. Limited (BeijingWits Medical), a leading Chinese CRO, for an initial cash consideration of $9.0 million. BeijingWits Medical offers full-service clinical development capabilities and has a strong track record in clinical trial execution in China. It is a renowned expert in Chinese regulatory processes and a leading advocate of International Conference on Harmonisation Good Clinical Practice (“ICH GCP”) in China. In addition to boosting the Company’s service capabilities in the region, BeijingWits Medical will also strengthen the Company’s presence through the addition of over 100 highly qualified and experienced professionals in Beijing, Shanghai, Chengdu, Guangzhou, Wuhan and Hong Kong. Further consideration of up to $7.0 million may become payable if certain performance milestones are achieved in respect of periods up to December 31, 2013. On June 13, 2013 the Company paid $3.8 million in relation to the remaining performance milestones for the year ended December 31, 2012. At December 31, 2013 the Company has recorded a liability of $3.2 million in respect of the additional consideration.

The following table summarizes the Company’s estimates of the fair values of assets acquired and the liabilities assumed:

	February 15
	2012
	(in thousands)
Property, plant and equipment	$	172
Goodwill*		13,512
Intangible asset – customer relationships		1,761
Intangible asset – order backlog		376
Intangible asset – non-compete arrangements		97
Cash and cash equivalents		587
Accounts receivable		657
Unbilled revenue		176
Other current assets		228
Deferred tax liability		(559	)
Current liabilities		(1,007	)
Liability arising from contingent consideration arrangement		(7,000	)
Net assets acquired	$	9,000

Cash consideration	$	9,000
Contingent consideration		7,000
Amount of total consideration		16,000
Liabilities included in preliminary purchase price allocation re contingent consideration		(7,000	)
Net assets acquired	$	9,000

* Goodwill represents the acquisition of an established workforce with experience in clinical trial execution and regulatory processes in China and is not tax deductible.

The proforma effect of the BeijingWits acquisition if completed on January 1, 2011 would have resulted in net revenue, net income and earnings per share for the fiscal years ended December 31, 2011 and December 31, 2012 as follows:

	Year Ended
	December 31,
	2012		2011
	(in thousands)
Net revenue	$	1,115,355	$	989,942
Net income	$	55,349	$	22,549
Basic earnings per share	$	0.92	$	0.37
Diluted earnings per share	$	0.92	$	0.37

(d) Acquisition of Firecrest Clinical

On July 14, 2011 the Company acquired 100% of the common stock of Firecrest Clinical Limited (“Firecrest”), a market leading provider of technology solutions that boost investigator site performance and study management, for an initial cash consideration of €17.0 million ($24.5 million). Headquartered in Limerick, Ireland, Firecrest Clinical provides a comprehensive site performance management system that is used to improve compliance consistency and execution of activities at investigative sites. The acquisition agreement provided that further consideration of up to €33.0 million ($46.8 million) would become payable if certain performance milestones were achieved in respect of periods up to June 30, 2013. At the date of acquisition the Company recorded a liability of €31.3 million ($44.0 million) in relation to these performance milestones, with the balance recorded as a non-cash finance charge relating to the acquisition contingent consideration. In March 2012 €3.0 million ($4.0million) was paid by the Company in relation to performance milestones for the six months ended June 30, 2011 and in July 2012 a further €10.0 million ($12.5 million) was paid by the Company in relation to performance milestones for the year ended December 31, 2011. In May 2013 €10.0 million ($13.0 million) was paid by the Company in relation to performance milestones for the year ended December 31, 2012 and in September 2013 a final payment of €10.0 million ($13.2 million) was made.

The acquisition agreement also provided for certain working capital targets to be achieved by Firecrest Clinical on completion. In March 2012 the Company paid €0.4 million ($0.5 million) on completion of this review.

The acquisition of Firecrest has been accounted for as a business combination in accordance with FASB ASC 805 Business Combinations. The following table summarizes the estimated fair values of the assets acquired and the liabilities assumed:

	July 14
	2011
	(in thousands)
Property, plant and equipment	$	687
Goodwill*		48,073
Intangible asset – technology asset		11,169
Intangible asset – customer relationships		5,243
Intangible asset – order backlog		1,172
Intangible asset - trade name		1,357
Cash and cash equivalents		1,965
Other current assets		3,713
Deferred tax liability		(2,367	)
Other liabilities		(2,521	)
Liability arising from contingent consideration arrangement		(44,028	)
Net assets acquired	$	24,463

Cash consideration	$	24,463
Contingent consideration		44,028
Amount of total consideration		68,491
Liabilities included in preliminary purchase price allocation re contingent consideration		(44,028	)
Net assets acquired	$	24,463

* Goodwill represents the cost of an established workforce with experience in the development of site performance and study management systems and process related efficiencies expected to be generated from the use of the Firecrest site performance management system and is not tax deductible.

The proforma effect of the Firecrest acquisition if completed on January 1, 2010 would have resulted in net revenue, net income and earnings per share for the fiscal years ended December 31, 2010 and December 31, 2011 as follows:

	Year Ended
	December 31,
	2011		2010
	(in thousands)
Net revenue	$	952,729	$	906,311
Net income	$	25,851	$	86,127
Basic earnings per share	$	0.43	$	1.44
Diluted earnings per share	$	0.42	$	1.42