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Note 11 - Goodwill Impairment
9 Months Ended
Sep. 30, 2011
Asset Impairment Charges [Text Block]
Note 11.  Goodwill Impairment

We test goodwill for impairment at least annually or more frequently if events or circumstances indicate that goodwill may be impaired.  As a result of the annual test, which was conducted as of May 31, 2011, we determined that no impairment existed given the fair value of each of our reporting units containing goodwill, Covenant and SRT, exceeded the carrying value of each reporting unit, including the $7.2 million and $4.3 million of goodwill related to Covenant and SRT, respectively. We perform our impairment tests of goodwill at the reporting unit level.  Our reporting units are defined as our subsidiaries because each is a legal entity that is managed separately.  Such impairment tests for goodwill include comparing the fair value of the respective reporting unit with its carrying value, including goodwill.  We use a variety of methodologies in conducting these impairment tests, including discounted cash flow analyses and market analyses.

Based upon a combination of factors that occurred in the third quarter of 2011, including a significant decline in our market capitalization below our book value, a reduction in year-over-year earnings as a result of deterioration in the macro-economic environment and the market segments in which we operate, reductions in current and forecasted earnings estimates, and the need to amend our Credit Facility to remain in compliance with our financial covenants currently and into the foreseeable future, we deemed that there had been multiple triggering events that would require an updated impairment analysis as of September 30, 2011. This updated analysis provided that the carrying value of both reporting units exceeded their fair values.  As a result, we are currently in the process of the second step of the goodwill impairment analysis, which involves calculating the implied fair value of our reporting units' goodwill by allocating the fair value of all of our assets and liabilities other than goodwill (including both recognized and unrecognized intangible assets) and comparing the residual amount to the carrying value of goodwill.

The non-cash goodwill impairment charge amounted to $11.5 million ($9.4 million, net of a $2.1 million income tax benefit) to write off the remaining goodwill associated with several acquisitions that were made prior to 2001.  Following this impairment charge, no goodwill currently remains on our balance sheet.  Any changes from this estimate upon completion of the analysis will be recorded in the fourth quarter of 2011 and disclosed in our Annual Report on Form 10-K for the year ending December 31, 2011.