NOTE 4. GOODWILL AND INTANGIBLE ASSETS

Goodwill

The Company's annual goodwill impairment test is conducted at November 30 of each calendar year and interim evaluations are performed when the Company determines that a triggering event has occurred that would more likely than not reduce the fair value of its goodwill below its carrying value. During the second quarter of 2012, due to a decline in the market price of the Company's stock, the market capitalization of the Company was below the carrying value, which we considered a triggering event and therefore performed an interim impairment test.

We have updated our annual impairment and year-end analysis as of June 30, 2012. Based on the step 1 analysis performed, management, with the assistance of a third party valuation specialist, determined on August 2, 2012 that the Company's fair value was below the carrying value of its equity as of June 30, 2012. As a result, the Company has estimated the range of impairment to be between $12.0 million and $212.0 million and has recorded in the second quarter of 2012 an estimated preliminary impairment charge of $12.0 million. Due to the timing and complexity of step 2 of the impairment test, which is required to determine the actual impairment, the Company was unable to finalize the amount of impairment prior to filing form 10-Q for the quarter ended June 30, 2012. Step 2 of the impairment test will be completed in the third quarter of 2012. Any adjustment to the estimated impairment charge made in the second quarter of 2012 will be recorded in the third quarter of 2012.

The following table represents changes in goodwill:

		December 31, 2011				Estimated Goodwill Impairment				June 30, 2012
Goodwill		$	211,805			$	12,000			$	199,805

Intangible Assets

Components of the Company's identifiable intangible assets are as follows:

	Weighted average amortization life (years)		Cost		Accumulated Amortization			Net
Balance at June 30, 2012:
Customer relationships		8.3	$	14,600	$	(2,470	)	$	12,130
Contractual backlog		6.5		6,700		(2,452	)		4,248
Customer contracts		5.4		3,500		(3,401	)		99
Trade name		1.5		600		(398	)		202
Total		7.3	$	25,400	$	(8,721	)	$	16,679

	Weighted average amortization life (years)		Cost		Accumulated Amortization			Net
Balance at December 31, 2011:
Customer relationships		8.3	$	14,600	$	(1,214	)	$	13,386
Contractual backlog		6.5		6,700		(1,943	)		4,757
Customer contracts		5.4		3,500		(3,307	)		193
Non-competition agreements		3.0		1,400		(1,400	)		-
Trade name		1.5		600		(195	)		405
Total		7.0	$	26,800	$	(8,059	)	$	18,741

During the first quarter of 2012, the Company wrote-off $1.4 million of fully amortized intangible assets related to the non-compete agreements acquired in the Kadix acquisition. The Company recorded amortization expense for its identifiable intangible assets of $1.0 million and $0.4 million for the three months ended June 30, 2012 and 2011, respectively, and $2.1 million and $0.7 million for the first half of 2012 and 2011, respectively. At June 30, 2012, estimated future amortization expense for the identifiable intangible assets to be recorded in subsequent fiscal years was as follows:

Year ending December 31:
Remainder of 2012		$	2,062
	2013	$	3,722
	2014	$	3,663
	2015	$	2,887
	2016	$	2,139
2017 and thereafter		$	2,206

Valuation of Long-Lived Assets

Long-lived assets, such as property, plant, and equipment, and intangible assets subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. Recoverability of asset groups to be held and used is measured by a comparison of the carrying amount of an asset group to estimated undiscounted future cash flows expected to be generated by the asset group. If the carrying amount of an asset group exceeds its estimated future cash flows, an impairment charge is recognized in our statement of operations and as a reduction to the asset group if it is concluded that the fair market value of the asset group is less than its carrying value. Due to the same circumstances that required the interim goodwill impairment test above, we evaluated our long lived assets for impairment for the quarter ended June 30, 2012. We determined that the carrying amount of our long-lived assets did not exceed their estimated undiscounted future cash flows, and thus our long-lived assets are not impaired as of June 30, 2012.