Long-Lived Assets

9 Months Ended

12 Months Ended

Sep. 29, 2012

Dec. 31, 2011

4. LONG-LIVED ASSETS

Goodwill

Changes in the carrying amount of our goodwill for the nine months ended September 29, 2012 are presented below (in thousands):


Balance, beginning of period	$	1,228,778
Foreign currency translation adjustments		1,163

Balance, end of period	$	1,229,941

Intangible assets, net

Identifiable intangible assets consisted of the following (in thousands):


September 29, 2012	Gross Carrying Amount		Accumulated Amortization			Intangible Assets, Net
Definite-lived intangible assets:
Customer relationships	$	570,037	$	(222,422	)	$	347,615
Patents and technology		460,961		(186,158	)		274,803
Trademarks and trade names		23,650		(3,565	)		20,085
Distributor contracts and relationships		5,226		(1,825	)		3,401
Non-compete agreements		3,654		(1,518	)		2,136

	$	1,063,528	$	(415,488	)		648,040

Indefinite-lived intangible assets:
Trademarks and trade names							411,896

Net identifiable intangible assets						$	1,059,936


December 31, 2011	Gross Carrying Amount		Accumulated Amortization			Intangible Assets, Net
Definite-lived intangible assets:
Customer relationships	$	569,528	$	(181,396	)	$	388,132
Patents and technology		460,624		(156,290	)		304,334
Trademarks and trade names		23,650		(1,807	)		21,843
Distributor contracts and relationships		5,089		(1,206	)		3,883
Non-compete agreements		3,636		(883	)		2,753

	$	1,062,527	$	(341,582	)		720,945

Indefinite-lived intangible assets:
Trademarks and trade names							411,749

Net identifiable intangible assets						$	1,132,694

Our definite-lived intangible assets are being amortized using the straight-line method over their remaining weighted average useful lives of 7.0 years for customer relationships, 10.0 years for patents and technology, 4.2 years for distributor rights, 8.5 years for trademarks and trade names, and 2.8 years for non-compete agreements. Based on our amortizable intangible asset balance as of September 29, 2012, we estimate that amortization expense will be as follows for the next five years and thereafter (in thousands):


Remaining 2012	$	23,589
2013		91,216
2014		89,150
2015		84,690
2016		80,836
Thereafter		278,559

	$	648,040

8.	LONG-LIVED ASSETS

Goodwill

Changes in the carrying amount of goodwill are presented in the table below (in thousands):


	Year Ended December 31,
	2011			2010
Balance, beginning of year	$	1,188,887		$	1,191,497
Acquisitions (see Note 3)		165,672			64
Impairment of goodwill		(124,106	)		—
Foreign currency translation		(1,675	)		(2,674	)

Balance, end of year	$	1,228,778		$	1,188,887

During the fourth quarter of 2011, we conducted our annual goodwill impairment test. As a result of this test, we determined that the carrying value of our Empi and Surgical Implant reporting units was in excess of its estimated fair value. Fair value was estimated using the income approach valuation methodology which includes the discounted cash flow method and the market approach valuation methodology which includes the use of market multiples.

As a result, we recorded an aggregate goodwill impairment charge of $124.1 million, consisting of $76.7 million for the Empi reporting unit, within the Recovery Sciences segment and $47.4 million for the Surgical Implant reporting unit. This impairment charge was included in impairment of goodwill and intangible assets in our consolidated statement of operations.

The goodwill impairment in our Empi reporting unit resulted primarily from reductions in our projected operating results due to unfavorable decisions made by certain third party payors related to insurance pricing for certain products sold by the Empi business.

The goodwill impairment in our Surgical Implant reporting unit resulted primarily from reductions in our projected operating results and estimated future cash flows for the business.

We have five other reporting units with goodwill assigned to them. For each of those five reporting units, the estimated fair values exceed their carrying value.

Identifiable intangible assets consisted of the following (in thousands):


December 31, 2011	Gross Carrying Amount		Accumulated Amortization			Intangible Assets, Net
Definite lived intangible assets:
Customer relationships	$	569,528	$	(181,396	)	$	388,132
Patents and technology		460,624		(156,290	)		304,334
Trademarks and trade names		23,650		(1,807	)		21,843
Distributor contracts and relationships		5,089		(1,206	)		3,883
Non-compete agreements		3,636		(883	)		2,753

	$	1,062,527	$	(341,582	)		720,945

Indefinite lived intangible assets:
Trademarks and trade names							411,749

Net identifiable intangible assets						$	1,132,694


December 31, 2010	Gross Carrying Amount		Accumulated Amortization			Intangible Assets, Net
Definite lived intangible assets:
Customer relationships	$	484,115	$	(130,362	)	$	353,753
Patents and technology		447,437		(119,985	)		327,452
Distributor contracts and relationships		789		(482	)		307
Non-compete agreements		459		(129	)		330

	$	932,800	$	(250,958	)		681,842

Indefinite lived intangible assets:
Trademarks and trade names							428,999

Net identifiable intangible assets						$	1,110,841

During the fourth quarter of 2011, as a result of our annual impairment test of our indefinite lived intangible assets, we determined that the carrying value of our Empi trade name was in excess of its estimated fair value and recorded an impairment charge of $16.9 million. This impairment charge was included in impairment of goodwill and intangible assets in our consolidated statement of operations.

Our definite lived intangible assets are being amortized using the straight line method over their remaining weighted average useful lives of 7.7 years for customer relationships, 10.4 years for patents and technology, 5.0 years for distributor contracts and relationships, 9.2 years for trademarks and trade names, and 3.5 years for non-compete agreements. Based on our amortizable intangible asset balance as of December 31, 2011, we estimate that amortization expense will be as follows for the next five years and thereafter (in thousands):


2012	$	97,004
2013		91,116
2014		89,098
2015		84,679
2016		80,808
Thereafter		278,240

	$	720,945

Our goodwill and intangible assets by segment are as follows (in thousands):


December 31, 2011	Goodwill		Intangible Assets, Net
Bracing and Vascular	$	705,954	$	949,335
Recovery Sciences		419,299		134,693
International		103,525		31,380
Surgical Implant		—		17,286

	$	1,228,778	$	1,132,694


December 31, 2010	Goodwill		Intangible Assets, Net
Bracing and Vascular	$	565,298	$	700,953
Recovery Sciences		495,999		353,323
International		80,184		36,453
Surgical Implant		47,406		20,112

	$	1,188,887	$	1,110,841

- 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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