GOODWILL AND INTANGIBLE ASSETS

6 Months Ended

Jun. 30, 2012

GOODWILL AND INTANGIBLE ASSETS

GOODWILL AND INTANGIBLE ASSETS

NOTE 2:   GOODWILL AND INTANGIBLE ASSETS

The change in the carrying amount of goodwill for the first six months of 2012 was as follows:

	eDiscovery		Bankruptcy		Settlement Administration		Total
	(in thousands)
Balance as of December 31, 2011	$	187,773	$	182,116	$	32,847	$	402,736
Purchase price adjustments	1,276		—		—		1,276
Foreign currency translation	45		—		—		45
Balance as of June 30, 2012	$	189,094	$	182,116	$	32,847	$	404,057

During the first quarter of 2012, we increased goodwill recorded in connection with our acquisition of De Novo Legal LLC (“De Novo”) by $1.3 million.  This adjustment is based on new information obtained since December 31, 2011, related to the results of an independent valuation of the fair value of De Novo’s property, plant and equipment.  See Note 11 of our Notes to Condensed Consolidated Financial Statements for further detail.

Identifiable intangible assets as of June 30, 2012 and December 31, 2011 consisted of the following:

	June 30, 2012				December 31, 2011
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
	(in thousands)
Amortizing intangible assets:
Customer relationships	$	124,512	$	62,580	$	124,283	$	50,813
Trade names	6,591		1,233		3,212		987
Non-compete agreements	18,947		13,218		18,947		11,711
Non-amortizing intangible assets:
Trade names	—		—		5,156		—
Total	$	150,050	$	77,031	$	151,598	$	63,511

During the first quarter of 2012, we increased our customer relationships intangible asset recorded in connection with our acquisition of De Novo by $0.2 million.  This adjustment was based on new information obtained since December 31, 2011, related to the results of an independent valuation of the fair value of De Novo’s property, plant and equipment which also impacted the valuation model used for customer relationships.  See Note 11 of our Notes to Condensed Consolidated Financial Statements for further detail.  Customer relationships, non-compete agreements and trade names carry a weighted average life of seven years, five years and eight years, respectively. The AACER® trade name acquired in 2010 was originally determined to have an indefinite life and was therefore not amortized from its October 2010 acquisition date through June 30, 2012.

During the second quarter of 2012, the remaining useful life of the AACER® trade name was evaluated to determine whether events and circumstances continue to support an indefinite useful life and it was determined that an indefinite life is no longer supportable.  This conclusion is based on plans to market current and potential future products or services under the Epiq trade name and we expect the useful life of the AACER® trade name to be ten years.  Accordingly, we will begin amortizing this trade name effective July 1, 2012.

Due to the change from an indefinite life to a ten-year useful life, we tested the AACER® trade name for impairment as of June 30, 2012, based on current financial forecasts and the expected useful life of ten years.  Per the results of this valuation analysis, the carrying value of the trade name exceeded its fair value by $1.8 million and accordingly we have recorded this amount as intangible asset impairment expense in the accompanying Condensed Consolidated Statements of Income.

Amortization expense related to identifiable intangible assets was $6.8 million and $6.2 million for the three months ended June 30, 2012 and 2011, respectively, and $13.5 million and $10.0 million for the six months ended June 30, 2012 and 2011, respectively.  The following table outlines the estimated future amortization expense related to intangible assets at June 30, 2012:

(in thousands)
Year Ending December 31,
2012 (from July 1, 2012 to December 31, 2012)	$	13,166
2013	18,988
2014	12,492
2015	9,835
2016	6,968
2017 and thereafter	11,570
Total	$	73,019