Intangible Assets

12 Months Ended

Jan. 31, 2012

(9)	Intangible Assets

	January 31, 2012							January 31, 2011
	Gross Carrying Amount		Accum. Amort.		Net Carrying Amount		Estimated Useful Life	Gross Carrying Amount		Accum. Amort.		Net Carrying Amount		Estimated Useful Life

Intangible assets subject to amortization:

Covenants not to compete	$	790,000	$	615,000	$	175,000	3 years	$	890,000	$	531,000	$	359,000	3-10 years
Customer relationships		19,547,000		3,757,000		15,790,000	3-15 years		11,947,000		2,438,000		9,509,000	3-15 years
Accreditations and certifications		20,000		17,000		3,000	5 years		20,000		13,000		7,000	5 years
Trademarks and tradenames		258,000		50,000		208,000	3-10 years		58,000		23,000		35,000	3 years
GSA Schedule		800,000		90,000		710,000	10 years		800,000		-		800,000	10 years
Total	$	21,415,000	$	4,529,000	$	16,886,000		$	13,715,000	$	3,005,000	$	10,710,000

Intangible assets not subject to amortization:

Goodwill					$	19,444,000						$	20,004,000
Trademarks and tradenames						100,000							400,000
Total					$	19,544,000						$	20,404,000

Amortization expense for intangible assets was $1,606,000 and $964,000 for the twelve months ended January 31, 2012 and 2011, respectively. The aggregate amortization for the next five years is estimated to be $1,927,000, $1,877,000, $1,834,000, $1,814,000 and $1,814,000 for fiscal years 2013 through 2017, respectively.

The changes in the carrying amount of goodwill were as follows:

Net balance as of January 31, 2010	$	14,769,000
Acquisitions and other (a)		5,235,000
Net balance as of January 31, 2011	$	20,004,000
Acquisitions (b)		1,231,000
Impairment ( c)		(1,791,000	)
Net balance as of January 31, 2012	$	19,444,000

(a) Acquisitions and other include $3,865,000 in Goodwill from the Mechtronic Solutions acquisition, $1,359,000 related to Elliott Laboratories earn-out and $11,000 related to the USTL earn-out.
(b) Acquisitions include $718,000 in Goodwill from the Ingenium acquisition and $512,000 in Goodwill from the LTI acquisition.
( c) Impairment loss of $1,791,000 is related to MSI.

For the year ended January 31, 2012, the Company recorded an impairment loss in the amount of $2,208,000 which consisted of $1,791,000 in goodwill impairment, $300,000 write-down of trade name intangibles and $117,000 write-off of a covenant not to compete. The goodwill impairment loss was related to the Mechtronic Solutions Inc. (MSI) acquisition in December 2010 and was due to lower than expected operating results as a result of significant, cost overruns on a fixed-bid contract, which also impacted future estimated cash flows.

During the course of the annual impairment testing, we noted one reporting unit with a fair value that was only 1.2% in excess of its carrying amount. Deterioration in estimated future cash flows in this reporting unit could result in future goodwill impairment. The goodwill carrying value at January 31, 2012 of this reporting unit was $8,260,000. Other reporting units with goodwill were not at risk of failing the step one impairment test as of January 31, 2012 as their fair values were at least 12% in excess of their carrying values. The Company continues to monitor events and circumstances which may affect the fair values of the reporting units.

- 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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