Goodwill And Other Intangible Assets

12 Months Ended

Dec. 31, 2012

Goodwill And Other Intangible Assets [Abstract]

NOTE 7: GOODWILL AND INTANGIBLE ASSETS

The Company's impairment testing for goodwill is performed annually in the fourth fiscal quarter or more frequently if indications of potential impairment exist. The Company has determined that its operating segments are the applicable reporting units because they are the lowest level at which discrete, reliable financial and cash flow information is regularly reviewed by the Company's chief operating decision maker. ASU 2011-08, Testing Goodwill for Impairment provides companies with the option to assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If, after assessing the qualitative factors, a company determines that it is not more likely than not that the fair value of a reporting unit is less than its carrying value, then performing the two-step impairment test is unnecessary. However, if a company concludes otherwise, then it is required to perform the first step of the two-step goodwill impairment test. If the carrying value of a reporting unit exceeds its fair value, then a company is required to perform the second step of the two-step goodwill impairment test.

The following table presents details of the Company's goodwill:


	December 31,
		2012		2011
	($ in thousands)
Beginning of year, Goodwill - Unified Communications	$	9,121	$	-
Goodwill acquired with the Alteva acquisition		-		9,121
End of year, Goodwill - Unified Communications	$	9,121	$	9,121

The Company performs an annual goodwill impairment test during the fourth quarter of the fiscal year and when triggering events are present. For its 2012 goodwill impairment testing the Company elected to not perform the qualitative assessment and proceed directly to performing the quantitative evaluation of the fair value of the reporting unit, to compare against the carrying value of the reporting unit. The estimated fair value of the reporting unit is based on discounted future cash flows. The Company makes significant assumptions to estimate the future revenue and cash flows used to determine the fair value of our reporting units. These assumptions include future growth rates, profitability, discount factors, market comparables, future tax rates, and other factors.

For the years ended December 31, 2012 and 2011, estimated fair value of the reporting unit exceeded its carrying value, therefore step two was not performed and impairment charges were not recorded.

The following table presents details of the Company's total purchased intangible assets:


($ in thousands)	Estimated		Gross		Accumulated			Net
	Useful Lives		Value		Amortization			Value
As of December 31, 2012
Customer relationships	8 years	$	5,400	$	(956	)	$	4,444
Trade name	15 years		2,400		(227	)		2,173
Telephone seat licenses	5 years		2,072		(558	)		1,514
Total		$	9,872	$	(1,741	)	$	8,131


	Estimated		Gross		Accumulated			Net
	Useful Lives		Value		Amortization			Value
As of December 31, 2011
Customer relationships	8 years	$	5,400	$	(281	)	$	5,119
Trade name	15 years		2,400		(67	)		2,333
Telephone seat licenses	5 years		1,372		(219	)		1,153
Total		$	9,172	$	(567	)	$	8,605

The amortization expense is recorded in the consolidated statements of operations under depreciation and amortization in the amounts of $1.2 million, $0.5 million, and $0.1 million for the years ended December 31, 2012, 2011, and 2010, respectively.

Future amortization expense is expected to be recorded as follows:


		Amount
Year		($ in thousands)
2013	$	1,244
2014		1,208
2015		1,191
2016		1,132
2017		914

- 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.

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