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4. Goodwill And Other Intangible Assets
9 Months Ended
Sep. 30, 2013
Goodwill and Intangible Assets Disclosure [Abstract]  
GOODWILL AND OTHER INTANGIBLE ASSETS

 

 Changes in goodwill for the nine months ended September 30, 2013 are as follows:

 

Goodwill:      
    2013  
December 31, 2012   $ 106,358  
Adjustment to the lower of carrying value or fair market value for Assets Held for Sale (Note 3)     (2,727 )
Reclassification  to Assets Held for Sale (Note 3)     (2,268 )
Additions related to acquisitions (Note 3)     163  
September 30, 2013   $ 101,526  

 

The Company’s accounting policy is to perform an annual goodwill impairment test in the fourth quarter or more frequently whenever events or circumstances indicate that goodwill or the carrying value of intangible assets may not be recoverable.  As of September 30, 2013, following a qualitative review of the key drivers of fair value, the Company determined that it was necessary to perform Step 1 of the quantitative goodwill impairment test in accordance with ASC 350, Intangibles- Goodwill and Other.  A valuation firm was used to perform the testing and determined that no impairment of goodwill was required, other than as described in Note 3-“Discontinued Operations, Dispositions and Acquisitions.”  Based on this analysis, fair value exceeded carrying value by 2.0%.  The quantitative analysis consisted of the income approach, specifically the discounted cash flow (“DCF”) method to derive the fair value of the Company.  The key variables that drive our cash flows are customer growth and attrition and operational efficiencies.  The terminal value growth rate assumption, as well as the Weighted Average Cost of Capital (“WACC”) rate applied, are additional key variables in the DCF model.  The estimates and assumptions used are subject to uncertainty, including our ability to grow revenue and our profitability levels.  Relatively small declines in the future performance and cash flows of the Company or small changes in the key assumptions may result in significant asset impairment charges.  For example, keeping all variables constant, an increase in the WACC rate of less than 1% or a decrease in forecasted revenue of 2% would require that we perform the second step of the goodwill impairment test.  The estimates used for our future cash flows and discount rates represent management’s best estimates, which we believe to be reasonable, but future declines in business performance may impair the recoverability of our goodwill and intangible assets balances and result in an impairment charge being recorded in future periods.

  

Amortization expense on finite lived intangible assets for the nine months ended September 30, 2013 and 2012 was $6.2 million and $6.5 million, respectively.  Also during the third quarter of 2013, as discussed in Note 3, “Discontinued Operations, Dispositions and Acquisitions,” the Company recorded $0.6 million of impairment related to its customer relationships and contracts.