Goodwill and Intangible Assets

12 Months Ended

Dec. 31, 2012

Goodwill and Intangible Assets [Abstract]

GOODWILL AND INTANGIBLE ASSETS

(4) GOODWILL AND INTANGIBLE ASSETS

(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 by reportable segments was as follows (in thousands):

	December 31,
	2012		2011
Recovery Audit Services – Americas	$	12,177	$	12,177
Recovery Audit Services – Europe/Asia-Pacific		896		173
New Services		596		596
Total	$	13,669	$	12,946

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. (“BSI”) (see Note 12 – Business Acquisitions 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. We also recorded additions to goodwill of $0.7 million and $0.2 million in our Recovery Audit Services – Europe Asia/Pacific segment in 2012 and 2011, respectively, 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”) and our completion of one associate migration in 2011. There were no changes in goodwill in our New Services segment during 2012 and 2011.

(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 intangible assets in 2012 related primarily to the completion of two associate migrations, CRC Management Consultants LLP (“CRC”) and QFS Ltd (“QFS”). Changes in intangible assets in 2011 related primarily to our December 2011 BSI acquisition and an associate migration. Note 12 – Business Acquisitions below includes a more detailed description of the acquisitions in both 2012 and 2011. Intangible assets associated with CRC, QFS and the 2011 associate migration are denominated in British pounds sterling and are subject to movements in foreign currency rates (“FX adjustments”). We present the amounts below in United States dollars utilizing foreign currency exchange rates as of December 31, 2012.

As of January 21, 2010, the Company changed its trade name from PRG-Schultz International, Inc. to PRGX Global, Inc. and is using the previous trade name only in limited circumstances. We intend to maintain the legal rights to the former name but, for accounting purposes, have reclassified the intangible asset associated with this trade name from an indefinite lived intangible asset to one with a definite life and began amortizing the trade name in January 2010.

Amortization expense relating to intangible assets was $5.4 million in 2012, $4.6 million in 2011 and $4.0 million in 2010. As of December 31, 2012 and based on our current amortization methods, we project amortization expense relating to intangible assets for the next five years will be $4.9 million in 2013, $3.6 million in 2014, $2.7 million in 2015, $1.7 million in 2016 and $1.4 million in 2017. 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 2012 and 2011 were as follows (in thousands):

	Customer Relationships			Trademarks			Non- compete Agreements			Trade Names			Total
Gross carrying amount:
Balance, January 1, 2011	$	36,505		$	505		$	1,553		$	2,865		$	41,428
Associate migration		—			—			98			—			98
Acquisition of BSI		2,836			555			650			—			4,041
FX adjustments and other		(35	)		(2	)		(8	)		—			(45	)
Balance, December 31, 2011		39,306			1,058			2,293			2,865			45,522
Acquisition of CRC		—			—			128			—			128
Acquisition of QFS		—			—			43			—			43
FX adjustments and other		359			23			44			—			426
Balance, December 31, 2012	$	39,665		$	1,081		$	2,508		$	2,865		$	46,119
Accumulated amortization:
Balance, January 1, 2011	$	(16,609	)	$	(123	)	$	(274	)	$	(567	)	$	(17,573	)
Amortization expense		(3,236	)		(104	)		(519	)		(747	)		(4,606	)
FX adjustments and other		52			3			8			—			63
Balance, December 31, 2011		(19,793	)		(224	)		(785	)		(1,314	)		(22,116	)
Amortization expense		(3,692	)		(238	)		(751	)		(713	)		(5,394	)
FX adjustments and other		(170	)		(11	)		(29	)		—			(210	)
Balance, December 31, 2012	$	(23,655	)	$	(473	)	$	(1,565	)	$	(2,027	)	$	(27,720	)
Net carrying amount:
Balance, December 31, 2011	$	19,513		$	834		$	1,508		$	1,551		$	23,406
Balance, December 31, 2012	$	16,010		$	608		$	943		$	838		$	18,399
Estimated useful life (years)		6–20 years			6 years			1–5 years			4–5 years