Goodwill and Intangibles

12 Months Ended

Dec. 31, 2011

Note 8: Goodwill and Intangible Assets

The changes in the carrying amount of goodwill by reportable segment were as follows:

($ in millions)	Packaging Systems			Delivery Systems			Total
Balance, December 31, 2009	$	39.3		$	74.9		$	114.2
Additions		-			1.8			1.8
Foreign currency translation		(2.7	)		(0.8	)		(3.5	)
Balance, December 31, 2010		36.6			75.9			112.5
Foreign currency translation		(0.7	)		(0.3	)		(1.0	)
Balance, December 31, 2011	$	35.9		$	75.6		$	111.5

As of December 31, 2011, we had no accumulated goodwill impairment losses.

In July 2010, we acquired 100% of the outstanding shares of La Model Ltd., the developer of the SmartDose electronic patch injector system, resulting in $1.2 million of goodwill. As part of this acquisition, Delivery Systems acquired $3.3 million of in-process R&D, which was considered to have an indefinite life until the completion of the associated research and development efforts, at which point the technology will start to be amortized over 17 years.

In January 2010, we purchased a tool design and testing company based in Roskilde, Denmark in which we acquired $0.7 million of intangible assets consisting of $0.4 million in customer relationships, $0.1 million in technical know-how and $0.2 million in software and licenses. Both the customer relationships and technical know-how have a useful life of 10 years, with the software and licenses having an estimated useful life of 5 years. This acquisition resulted in goodwill of $0.6 million.

Intangible assets and accumulated amortization as of December 31 were as follows:

	2011							2010
($ in millions)	Cost		Accumulated Amortization			Net		Cost		Accumulated Amortization			Net
Patents and licensing	$	17.0	$	(6.7	)	$	10.3	$	15.7	$	(5.5	)	$	10.2
In-process R&D/technology		3.5		-			3.5		3.4		-			3.4
Trademarks		12.0		(0.8	)		11.2		12.1		(0.6	)		11.5
Customer relationships		29.7		(11.2	)		18.5		29.7		(9.5	)		20.2
Customer contracts		11.4		(3.1	)		8.3		11.5		(2.5	)		9.0
Non-compete agreements		3.9		(3.7	)		0.2		3.9		(3.1	)		0.8
	$	77.5	$	(25.5	)	$	52.0	$	76.3	$	(21.2	)	$	55.1

The cost basis of intangible assets includes foreign currency translation losses of $0.2 million and $0.9 million for the twelve months ended December 31, 2011 and 2010, respectively. Amortization expense for the years ended December 31, 2011, 2010 and 2009 was $4.3 million, $4.1 million and $3.8 million, respectively. Estimated annual amortization expense for the next five years is as follows: 2012 - $3.9 million, 2013 and 2014 - $3.7 million, 2015 - $3.4 million and 2016 - $2.8 million. Trademarks with a carrying amount of $10.0 million were determined to have indefinite lives and therefore do not require amortization.

As part of our annual long-range planning process, our sales and marketing teams updated sales projections during the third quarter of 2011, which indicated delays and lower-than-expected demand for our eris, Confidose and NovaGuard product lines. The revised projections triggered an impairment review of the assets associated with these product lines. Our review concluded that the future cash flows associated with these product lines were still expected to exceed the carrying value of the related assets and, therefore, no impairment charge was required. We continued to monitor these product lines during our annual review of goodwill and indefinite-lived intangible assets, and determined that no impairment charge was required for these product lines. At December 31, 2011, our investment in equipment and intangible assets, excluding goodwill, for eris, Confidose and NovaGuard was $13.3 million, $5.9 million and $3.4 million, respectively.

- 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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