Goodwill

Goodwill represents the excess of the cost of companies acquired over the fair value of their net assets at the dates of acquisition. GAAP requires that goodwill not be amortized and that goodwill is to be tested for impairment at least annually at the reporting unit level. The Company tests for goodwill impairment annually on October 1

unless impairment triggers exist at interim periods. There are two steps involved in the testing of goodwill, excluding a qualitative analysis. The first step compares the book value of the Company’s stock (stockholders’ equity or net assets) to the adjusted fair market value of those shares. If the adjusted fair value of the stock is greater than the calculated book value of the stock, goodwill is deemed not to be impaired and no further testing is required. If the adjusted fair value is less than the calculated book value, then step two of determining the fair value of net assets must be taken to determine the impairment amount.

To determine the fair value of the Company’s net assets, the Company used the weighted average of the following valuation techniques: the market approach, which uses market capitalization information plus a control premium and an income approach, which uses a discounted cash flow methodology. The market approach includes level one fair value inputs, such as the Company’s stock price, at the date of our test, and level two fair value inputs, such as the control premiums based on prior year sales transactions of construction contractors and engineering services, similar sized transactions based on the Company’s market capitalization, and all-inclusive total industries transactions. The income approach includes level three inputs such as the Company’s calculated weighted average cost of capital and future income projections that include assumptions about revenue and gross profit growth, along with other assumptions.

During the first and third quarters of 2015, the Company noted there was an impairment trigger present during these interim periods and performed step one of the impairment test discussed above. Based on the results of our goodwill impairment tests, we concluded that there was not an impairment of goodwill during these periods. In addition, as part of our 2015 and 2014 annual tests, we determined that the fair value of the Company’s equity continues to be more than the carrying value of the Company’s equity by approximately 21% and 19%, respectively.

At December 31, 2015, we had goodwill with a remaining carrying amount of approximately $54.8 million. Testing under step one in 2014 and 2013 also did not indicate that the adjusted fair value of the Company’s stock was less than its book value.