Goodwill

The following table reflects goodwill allocated to each reporting segment at December 31, 2012 and 2011:



	Energy			Water			Total Company
	(in thousands)
Goodwill balance at January 1, 2011	$	792,873		$	416,503		$	1,209,376
Goodwill acquired	10,251			—			10,251
Goodwill impairment	(254,735		)	(330,112		)	(584,847		)
Other	(981		)	(6,739		)	(7,720		)
Effect of change in exchange rates	6,458			3,392			9,850
Goodwill balance at December 31, 2011	553,866			83,044			636,910

Goodwill acquired	46,101			—			46,101
Other	3,994			773			4,767
Effect of change in exchange rates	5,991			7,247			13,238

Balance at December 31, 2012
Goodwill before impairment	859,454			414,394			1,273,848
Accumulated impairment loss	(249,502		)	(323,330		)	(572,832		)
Goodwill, net	$	609,952		$	91,064		$	701,016

Goodwill acquired in 2012 is based on the preliminary purchase price allocation relating to the SmartSynch acquisition on May 1, 2012. Refer to Note 17 for additional information regarding this acquisition.

In the preceding table, "Other" includes activities associated with our restructuring announced in the fourth quarter of 2011. During the third quarter of 2012, we identified an error in our consolidated financial statements for the year ended December 31, 2011, which resulted in an overstatement of restructuring expense related to the expected sale of a non-core business. The identified assets to be disposed originally included $6.7 million of goodwill, which was impaired and charged to restructuring expense as a result of the expected sale proceeds being less than the carrying value of the identified assets. During the third quarter of 2012, we determined the amount of goodwill that should have been allocated to the asset disposal group was $1.3 million. In accordance with the relevant guidance, management evaluated the materiality of the error from a qualitative and quantitative perspective. Based on such evaluation, we concluded that correcting the goodwill allocated to this business asset group is not material, quantitatively or qualitatively, to our results of operations for the results of operations for the year ended December 31, 2012 and would not have had a material impact on our results for the year ended December 31, 2011. Accordingly, we recorded a non-cash adjustment during the third quarter of 2012 to reduce restructuring expense and increase goodwill by $5.4 million. Refer to Note 13 for additional disclosure on Itron's restructuring costs. Additionally, in the third quarter, we sold a non-core business in Europe to which we allocated $675,000 of goodwill, which was recognized as restructuring expense. For the year ended December 31, 2011, "Other" includes goodwill reductions related to assets identified as held for sale as of December 31, 2011, including the $5.4 million error as discussed above.

As a result of a significant decline in the price of our shares of common stock at the end of September 2011, our aggregate market value was significantly lower than the aggregate carrying value of our net assets. As a result, we performed an impairment test of our goodwill as of September 30, 2011, and recorded total goodwill impairment charges of $584.8 million in the year ended December 31, 2011. These goodwill impairment charges were associated with our previous reporting units of Itron International Electricity and Itron International Water. The accumulated impairment losses were reallocated to our new operating segments, Energy and Water, effective January 1, 2012.

Goodwill and accumulated impairment losses associated with our international subsidiaries are recorded in their respective functional currencies; therefore, the carrying amounts of these balances increase or decrease, with a corresponding change in accumulated OCI, due to changes in foreign currency exchange rates.