Goodwill

The following table reflects the goodwill balance as of September 30, 2013:



	Energy			Water			Total Company
	(in thousands)
Balance at January 1, 2013
Goodwill before impairment	$	859,454		$	414,394		$	1,273,848
Accumulated impairment losses	(249,502		)	(323,330		)	(572,832		)
Goodwill, net	609,952			91,064			701,016

Adjustments of previous acquisition	3,958			—			3,958
Effect of change in exchange rates	6,672			1,064			7,736

Balance at September 30, 2013
Goodwill before impairment	874,566			421,266			1,295,832
Accumulated impairment losses	(253,984		)	(329,138		)	(583,122		)
Goodwill, net	$	620,582		$	92,128		$	712,710

During the second quarter of 2013, we finalized the purchase price allocation related to the SmartSynch acquisition, which was completed on May 1, 2012, and recorded certain adjustments that are reflected as Adjustments of previous acquisition above. These adjustments primarily affected the fair value calculation of certain accrued liabilities associated with specific contracts. Among these adjustments is the correction of an error associated with a long-term revenue contract acquired from SmartSynch. In May 2013, we determined that certain manufacturing costs were not reflected in the model used to value this contract at acquisition. Once these costs were properly added to the total cost and profitability estimates, we determined the total contract would result in a loss of $2.4 million over the contract term. Therefore, we recognized a liability for this expected loss on the contract and made a corresponding adjustment to goodwill. Further, we had previously recognized a customer relationship intangible asset of $1.5 million associated with this contract, with amortization scheduled to begin in 2014 based on the contract's original projected cash flow. Since the contract is in an overall loss position, we determined that the intangible asset had no value. We reduced the value of this intangible asset to zero with a corresponding adjustment to goodwill. In accordance with relevant accounting guidance, we evaluated the materiality of the error from a qualitative and quantitative perspective. Based on such evaluation, we concluded that recognizing the contract liability and adjusting the intangible asset value during the three months ended June 30, 2013 would not be material, quantitatively or qualitatively, to our results of operations for the three months ended June 30, 2013 or our expected full year results of operations for 2013 and would not have had a material impact on our results for the year ended December 31, 2012. Because these adjustments were not material individually or in aggregate, we did not retrospectively adjusted the comparative amounts on the Consolidated Balance Sheet as of December 31, 2012.

Goodwill and accumulated impairment losses associated with our international subsidiaries are recorded in their respective functional currency; 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.