Goodwill and Intangibles

6 Months Ended

Jun. 30, 2016

Goodwill And Intangible Assets Disclosure [Abstract]

Note 5. Goodwill and Intangibles

The Company assigns goodwill to a reporting unit and tests the goodwill annually on October 1 unless a triggering event had occurred. A reporting unit is defined as an operating segment or one level below an operating segment. The reporting units are not the equivalent to the reportable segments as we have five reporting units and three reportable segments. The Company’s Infrastructure Services and Field Services segments are each considered a reporting unit. The Company’s Professional Services segment includes two reporting units which are its Core Network Deployment (“CND”) reporting unit and its Central Network Engineering (“CNE”) reporting unit.

The Company assesses goodwill and other intangible assets with indefinite lives for impairment annually and when an event occurs or circumstances change that would suggest a triggering event. If a triggering event is identified, a step one assessment is performed to identify any possible goodwill impairment in the period in which the event is identified. In connection with our annual assessment of goodwill performed during the fourth quarter of calendar year 2015, we updated our key assumptions, including our forecasts of revenue and income for each reporting unit. As previously noted, there can be no assurance that the revenue estimates and assumptions regarding forecasted cash flows, the impact of further declines in AT&T Inc. (“AT&T”) spending, or other inputs used in forecasting the present value of forecasted cash flows will prove to be accurate projections of future performance.

Determining the fair value of a reporting unit or an indefinite-lived intangible asset involves judgment and the use of significant estimates and assumptions, particularly related to future operating results and cash flows. These estimates and assumptions include, but are not limited to, revenue growth rates and operating margins used to calculate projected future cash flows, risk-adjusted discount rates, future economic and market conditions and identification of appropriate market comparable data. Preparation of forecasts and the selection of the discount rate involve significant judgments that we base primarily on existing firm orders, expected future orders, and general market conditions. Significant changes in these forecasts, the discount rate selected, or the weighting of the income and market approach could affect the estimated fair value of one or more of our reporting units and could result in a goodwill impairment charge.

During the three months ended June 30, 2016, the Company concluded that an interim impairment test of the goodwill of its CND reporting unit within the Professional Services segment was necessary. This conclusion was based on certain indicators of impairment, including the reduction in a bid and project backlog for enterprise customers as a result of carriers reducing funding for DAS projects. Prior to conducting the goodwill impairment test, the Company first evaluated the other long-lived assets of the CND reporting unit for recoverability. Recoverability was tested using undiscounted future cash flow projections based on management’s long-range estimates of market conditions. The undiscounted cash flows of the long lived assets of the CND reporting unit including its customer relationships, non-competes and property and equipment exceeded the carrying value.

The Company then looked for indications of impairment of the goodwill of the CND reporting unit by comparing the fair value, determined using discounted cash flows using a weighted income statement and market approach, to its carrying value which indicated that a step 2 calculation to quantify the potential impairment was required. After a subsequent review of the fair value of the net assets of the CND reporting unit, it was determined that the implied fair value of goodwill was $0 and, accordingly, the entire $8.6 million goodwill balance was written-off during the three months ended June 30, 2016. The key assumptions used in the fair value calculations were projected cash flows and the discount rate.

Goodwill to be disposed of as result of the sale of certain assets and liabilities within our Infrastructure Services segment is included in current assets held for sale on the consolidated balance sheets as of June 30, 2016. The changes in goodwill, by business segment for the six months ended June 30, 2016 are as follows (in thousands):

	Field Services		Professional Services			Total
Goodwill at December 31, 2015	$	58,648	$	8,648		$	67,296
Impairment adjustments		—		(8,648	)		(8,648	)
Disposition of business		—		—			—
Goodwill at June 30, 2016	$	58,648	$	—		$	58,648

Intangible assets were as follows (in thousands):

	Gross Carrying Amount		Accumulated Amortization		Impairment Charges		Intangible Assets, net
Customer contracts	$	13,900	$	4,008	$	—	$	9,892
Customer relationships		6,610		4,398		—		2,212
Tradename		3,860		3,860		—		—
Noncompete agreements		3,150		2,101		—		1,049
Customer backlog		1,400		1,400		—		—
Total	$	28,920	$	15,767	$	—	$	13,153

Amortization of intangible assets was $1.5 million and $0.6 million for the three months ended June 30, 2015 and 2016, respectively and $2.9 million and $1.3 million for the six months ended June 30, 2015 and 2016, respectively.

- 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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