Goodwill and Intangible Assets

12 Months Ended

Dec. 31, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

(a) Goodwill

We evaluate the recoverability of goodwill in the fourth quarter of each year or sooner if events or changes in circumstances indicate that the carrying amount may exceed its fair value. These analyses did not result in an impairment charge during the periods presented. Goodwill in our Recovery Audit Services - Americas segment includes accumulated impairment losses of $359.9 million recorded in 2002 and 2005.

Goodwill by reportable segments during 2015 and 2014 was as follows (in thousands):



	Recovery Audit Services – Americas			Recovery Audit Services – Europe/Asia- Pacific			Adjacent Services			Total
Balance, January 1, 2014	$	12,177		$	913		$	596		$	13,686
Goodwill disposed in connection with business divestiture	—			—			(596		)	(596		)
Foreign currency translation	—			(54		)	—			(54		)
Balance, December 31, 2014	12,177			859			—			13,036
Goodwill disposed in connection with business divestiture	(1,422		)	—			—			(1,422		)
Goodwill recorded in connection with business combinations	—			—			242			242
Foreign currency translation	—			(46		)	—			(46		)
Balance, December 31, 2015	$	10,755		$	813		$	242		$	11,810

We initially recorded goodwill of $7.8 million in our Recovery Audit Services – Americas segment in conjunction with our December 2011 acquisition of Business Strategy, Inc. and substantially all the assets of an affiliated company (collectively, “BSI”) (see Note 12 below). We recorded purchase price adjustments in 2012 of $0.2 million that reduced the BSI goodwill to $7.6 million and recorded this change retroactively to 2011 bringing the total goodwill for this segment to $12.2 million as of December 31, 2013. We also recorded additions to goodwill of $0.7 million in our Recovery Audit Services – Europe/Asia-Pacific segment in 2012 relating to our acquisitions in 2012 of two third-party audit firms to which we had subcontracted a portion of our audit services (“associate migrations”) bringing the total goodwill for this segment to $0.9 million as of December 31, 2013. During 2015, we recorded goodwill of 0.2 million in our Adjacent Services segment relating to the acquisition of the Supplier Information Management ("SIM") business from Global Edge.

In October 2014, we divested certain previously acquired assets within our Adjacent Services segment that were related to our Chicago, Illinois-based consulting business (see Note 12 below). The goodwill from the 2010 purchase of TJG Holdings LLC was disposed of as a result of this divestiture. During August 2015, we divested certain assets from a document service offering within our Recovery Audit Services - Americas segment and disposed of (1.4) million of associated goodwill.

(b) Intangible Assets

Intangible assets consist principally of amounts we assigned to customer relationships, trademarks, non-compete agreements and trade names in conjunction with business acquisitions. Changes in gross carrying amounts for intangible assets in 2015 related primarily to the divestiture of certain assets from a document service offering ("SDS assets"). Changes in gross carrying amounts for intangible assets in 2014 related primarily to the divestiture of certain previously acquired assets within our Adjacent Services segment that were related to our Chicago, Illinois-based consulting business ("TJG assets"). There were no changes in gross carrying amounts for intangible assets in 2013, outside of foreign currency adjustments. Note 12 – Business Acquisitions and Divestitures below includes a more detailed description of the divestiture in 2014 and recent acquisitions. Certain of our intangible assets associated with acquisitions of assets or businesses by our foreign subsidiaries are denominated in the local currency of such subsidiary and therefore are subject to foreign currency ("FX") adjustments. We present the amounts for these transactions in United States dollars utilizing foreign currency exchange rates as of the respective balance sheet dates.

Amortization expense relating to intangible assets, other than acquired work in process, was $2.5 million in 2015, $3.5 million in 2014 and $4.8 million in 2013. As of December 31, 2015 and based on our current amortization methods, we project amortization expense relating to intangible assets for the next five years will be $1.5 million in 2016, $1.2 million in 2017, $1.1 million in 2018, $1.0 million in 2019 and $0.9 million in 2020. We generally use accelerated amortization methods for customer relationships and trade names, and straight-line amortization for non-compete agreements.

Changes in noncurrent intangible assets during 2015 and 2014 were as follows (in thousands):



	Customer Relationships			Trademarks			Non- compete Agreements			Trade Names			Total
Gross carrying amount:
Balance, January 1, 2014	$	39,815		$	1,090		$	2,529		$	2,865		$	46,299
Disposition of TJG assets	(829		)	—			(808		)	(665		)	(2,302		)
FX adjustments and other	(490		)	(31		)	(64		)	—			(585		)
Balance, December 31, 2014	38,496			1,059			1,657			2,200			43,412
Disposition of SDS assets	(291		)	(101		)	(126		)	—			(518		)
FX adjustments and other	(421		)	(27		)	(54		)	—			(502		)
Balance, December 31, 2015	$	37,784		$	931		$	1,477		$	2,200		$	42,392
Accumulated amortization:
Balance, January 1, 2014	$	(27,168	)	$	(700	)	$	(2,142	)	$	(2,707	)	$	(32,717	)
Amortization expense	(3,122		)	(197		)	(137		)	(75		)	(3,531		)
Disposition of TJG assets	371			—			808			582			1,761
FX adjustments and other	423			28			63			—			514
Balance, December 31, 2014	(29,496		)	(869		)	(1,408		)	(2,200		)	(33,973		)
Amortization expense	(2,211		)	(125		)	(122		)	—			(2,458		)
Disposition of SDS assets	64			87			95			—			246
FX adjustments and other	397			26			54			—			477
Balance, December 31, 2015	$	(31,246	)	$	(881	)	$	(1,381	)	$	(2,200	)	$	(35,708	)
Net carrying amount:
Balance, December 31, 2014	$	9,000		$	190		$	249		$	—		$	9,439
Balance, December 31, 2015	$	6,538		$	50		$	96		$	—		$	6,684
Estimated useful life (years)	6-20 years			6 years			1-5 years			4-5 years

- 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.

+ References + Details