13. Goodwill and Other Intangible Assets

The changes in the carrying amount of goodwill by reportable segment are as follows:


	Corporate Finance/ Restructuring			Forensic and Litigation Consulting		Economic Consulting		Technology		Strategic Communications			Total
Balance December 31, 2011:
Goodwill	$	436,043		$	198,047	$	229,487	$	117,958	$	327,823		$	1,309,358
Accumulated goodwill impairment		—			—		—		—		—			—

Goodwill, net December 31, 2011	$	436,043		$	198,047	$	229,487	$	117,958	$	327,823		$	1,309,358

Acquisitions ⁽¹⁾		31,644			—		—		—		—			31,644
Contingent consideration ⁽²⁾		905			23		17,708		—		—			18,636
Foreign currency translation adjustment and other		458			887		523		77		8,839			10,784
Goodwill impairment		—			—		—		—		(110,387	)		(110,387	)

Balance December 31, 2012:
Goodwill		469,050			198,957		247,718		118,035		336,662			1,370,422
Accumulated goodwill impairment		—			—		—		—		(110,387	)		(110,387	)

Goodwill, net December 31, 2012	$	469,050		$	198,957	$	247,718	$	118,035	$	226,275		$	1,260,035

Acquisitions ⁽¹⁾		18,713			10,979		945		—		4,961			35,598
Contingent consideration ⁽²⁾		437			—		14,530		—		—			14,967
Foreign currency translation adjustment and other		(7,019	)		244		281		38		(1,659	)		(8,115	)
Intersegment transfers in/(out) ⁽³⁾		(31,471	)		31,471		—		—		—			—
Goodwill impairment		—			—		—		—		(83,752	)		(83,752	)

Balance December 31, 2013:
Goodwill		449,710			241,651		263,474		118,073		339,964			1,412,872
Accumulated goodwill impairment		—			—		—		—		(194,139	)		(194,139	)

Goodwill, net December 31, 2013		449,710			241,651		263,474		118,073		145,825			1,218,733

⁽¹⁾	Includes adjustments during the purchase price allocation period.

⁽²⁾	Contingent consideration is related to business combinations consummated prior to January 1, 2009.

⁽³⁾	Includes the reclassification of the Company’s Corporate Finance/Restructuring segment’s healthcare and life sciences practices into the Forensic and Litigation Consulting segment. See Note 19 “Segment Reporting” for information on this segment reclassification.

2013 Goodwill Impairment Test

In the third quarter of 2013, in addition to reduced levels of M&A activity, our Strategic Communications segment experienced pricing pressure for certain discretionary communications services, including initial public offering support services where there is volume but also increasing competition. These factors compressed segment margins and contributed to a change in the Company’s near-term outlook for this segment. This was considered an interim impairment indicator for the Strategic Communications segment at the Strategic Communications reporting unit level. As a result, we performed an interim impairment analysis with respect to the carrying value of goodwill in our Strategic Communications reporting unit in connection with the preparation of our financial statements for the quarter ended September 30, 2013. The results of the Step 1 goodwill impairment analysis indicated that the estimated fair value of our Strategic Communications reporting unit was less than its carrying value; therefore, we applied Step 2 of the goodwill impairment test. The results of Step 2 indicated that the carrying values of the goodwill associated with the Strategic Communications reporting unit exceeded its implied fair value, resulting in a $83.8 million non-deductible goodwill impairment charge which is recorded as a separate line item within operating income (loss) within the Consolidated Statements of Comprehensive Income (Loss). The impairment charge was non-cash in nature and did not affect the Company’s current liquidity, cash flows, borrowing capability or operations; nor did it impact the debt covenants under the Company’s existing credit facility and the Indentures for the 2020 and 2022 Notes.

For the 2013 annual goodwill impairment test performed as of the Company’s measurement date of October 1, 2013, we utilized the quantitative test described below for our other reporting units. The results of the Step 1 goodwill impairment analysis indicated that the estimated fair values of our other reporting units exceeded their respective carrying values.

The fair values of our reporting units were estimated using a combination of appropriately weighted income and market approaches. The cash flows employed in the income approach are based on our most recent budgets, forecasts and business plans, as well as various growth rate assumptions for years beyond the current business plan period. In the income approach, the cash flows were discounted using an estimated weighted average cost of capital “(WACC”) based on our assessment of the risk inherent in the future revenue streams and cash flows and our WACC. The WACC is comprised of (1) a risk free rate of return, (2) an equity risk premium that is based on the rate of return on equity of publicly traded companies with business characteristics comparable to our reporting units, (3) the current after-tax market rate of return on debt of companies with business characteristics similar to our reporting units, each weighted by the relative market value percentages of our equity and debt, and (4) an appropriate size premium. In the market approach, we utilize market multiples derived from comparable guideline companies and comparable market transactions to the extent available. These valuations are based on estimates and assumptions including projected future cash flows and the determination of appropriate market comparables and determination of whether a premium or discount should be applied to such comparables.

2012 Annual Goodwill Impairment Test

For the 2012 annual goodwill impairment test performed as of October 1, 2012, we utilized the quantitative test for all our reporting units. The fair values of the Corporate Finance/Restructuring, Forensic and Litigation Consulting, Economic Consulting and Technology reporting units were estimated using a market approach while the fair value of the Strategic Communications reporting unit was estimated using a combination of appropriately weighted income and market approaches. The cash flows employed in the income approach are based on our most recent budgets, forecasts and business plans developed in the fourth quarter, as well as various growth rate assumptions for years beyond the current business plan period, discounted using an estimated WACC. Our discount rate assumptions are based on an assessment of the risk inherent in the future revenue streams and cash flows and our WACC. The risk adjusted discount rate used represents the estimated WACC for our reporting units. The WACC is comprised of (1) a risk free rate of return, (2) an equity risk premium that is based on the rate of return on equity of publicly traded companies with business characteristics comparable to our reporting units, (3) the current after-tax market rate of return on debt of companies with business characteristics similar to our reporting units, each weighted by the relative market value percentages of our equity and debt, and (4) an appropriate size premium.

The results of the Step 1 goodwill impairment analysis indicated that the estimated fair value of our Strategic Communications reporting unit was less than its carrying value while the estimated fair values of our other reporting units exceeded their respective carrying values. The Strategic Communications reporting unit fair value was unfavorably impacted by a combination of lower current and projected cash flows. Because our Strategic Communications reporting unit’s fair value estimate was lower than its carrying value, we applied the second step of the goodwill impairment test.

The second step of the goodwill impairment analysis indicated that the carrying values of the goodwill associated with the Strategic Communications reporting unit exceeded its implied fair value, resulting in a $110.4 million non-deductible goodwill impairment charge. The impairment charge was non-cash in nature and did not affect the Company’s current liquidity, cash flows, borrowing capability or operations; nor did it impact the debt covenants under the Company’s existing credit facility.

Otherintangible assets with finite lives are amortized over their estimated useful lives. We recorded amortization expense of $23.0 million, $22.6 million, and $22.4 million during the years ended December 31, 2013, 2012 and 2011, respectively. Based solely on the amortizable intangible assets recorded at December 31, 2013, we estimate amortization expense to be $14.5 million in 2014, $12.7 million in 2015, $11.2 million in 2016, $10.5 million in 2017, $8.9 million in 2018 and an aggregate of $33.7 million in years after 2018. Actual amortization expense to be reported in future periods could differ from these estimates as a result of new intangible asset acquisitions, changes in useful lives or other relevant factors or changes.


	Useful Life in Years	December 31, 2013				December 31, 2012
	Useful Life in Years	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Amortized intangible assets
Customer relationships	1 to 15	$	157,064	$	73,977	$	151,990	$	64,095
Non-competition agreements	1 to 10		10,922		9,051		15,184		11,158
Software	3 to 10		40,095		33,625		33,979		27,424
Tradenames	1 to 2		485		365		180		75

			208,566		117,018		201,333		102,752
Unamortized intangible assets
Tradenames	Indefinite		5,600		—		5,600		—

		$	214,166	$	117,018	$	206,933	$	102,752