Goodwill And Intangible Assets

9 Months Ended

Sep. 30, 2012

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

The changes in the carrying amount of goodwill for the nine months ended September 30, 2012 are as follows:



(In thousands)	Generics Segment		Specialty Segment			Total
Balance at December 31, 2011:
Goodwill	$	3,196,428	$	706,507		$	3,902,935
Accumulated impairment losses	—		(385,000		)	(385,000		)
	3,196,428		321,507			3,517,935
Foreign currency translation	13,199		—			13,199
	$	3,209,627	$	321,507		$	3,531,134
Balance at September 30, 2012:
Goodwill	$	3,209,627	$	706,507		$	3,916,134
Accumulated impairment losses	—		(385,000		)	(385,000		)
	$	3,209,627	$	321,507		$	3,531,134

Intangible assets consist of the following components:



(In thousands)	Weighted Average Life (Years)	Original Cost		Accumulated Amortization		Net Book Value
September 30, 2012
Amortized intangible assets:
Patents and technologies	20	$	116,631	$	85,551	$	31,080
Product rights and licenses	10	3,464,311		1,656,438		1,807,873
Other ⁽¹⁾	8	182,221		54,361		127,860
		3,763,163		1,796,350		1,966,813
IPR&D		425,279		—		425,279
		$	4,188,442	$	1,796,350	$	2,392,092
December 31, 2011
Amortized intangible assets:
Patents and technologies	20	$	116,631	$	82,815	$	33,816
Product rights and licenses	10	3,364,263		1,418,492		1,945,771
Other ⁽¹⁾	8	200,663		45,604		155,059
		3,681,557		1,546,911		2,134,646
IPR&D		496,101		—		496,101
		$	4,177,658	$	1,546,911	$	2,630,747

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⁽¹⁾	Other intangible assets consist principally of customer lists and contracts.

Amortization expense, which is classified primarily within cost of sales on Mylan’s Condensed Consolidated Statements of Operations, for the nine months ended September 30, 2012 and September 30, 2011, was $304.7 million and $273.0 million, respectively. Amortization expense is expected to be approximately $86 million for the remainder of 2012 and $342 million, $335 million, $312 million and $245 million for the years ended December 31, 2013 through 2016, respectively.

Indefinite-lived intangibles, such as the Company’s IPR&D assets, are tested at least annually for impairment, but may be tested whenever certain impairment indicators are present. Impairment is determined to exist when the fair value is less than the carrying value of the assets being tested.

The Company performs its annual impairment review of certain IPR&D assets at September 30th. This review of IPR&D assets principally relates to assets acquired as part of the Bioniche Pharma (“Bioniche”) acquisition in September 2010. For the three and nine months ended September 30, 2012 and 2011, the Company recorded impairment charges related to the Bioniche IPR&D assets in the amounts of $41.6 million and $16.2 million, respectively, which were recorded as a component of amortization expense. These impairment charges resulted from the Company’s estimate of the fair value of these assets, which was based upon updated forecasts, compared with the assigned fair values at the acquisition date. The fair value was determined based upon detailed valuations employing the income approach which utilized Level 3 inputs, as defined in Note 8. The fair value of IPR&D was calculated as the present value of the estimated future net cash flows using a market rate of return. The assumptions inherent in the estimated future cash flows include, among other things, the impact of changes to the development programs, the projected development and regulatory time frames and the current competitive environment. A discount rate of approximately 10% was utilized in the valuation at September 30, 2012 and 2011. Changes to any of the Company’s assumptions may result in a further reduction to the estimated fair value of the IPR&D asset.

During the nine months ended September 30, 2012, approximately $33.0 million was reclassified from acquired IPR&D to product rights and licenses. Also during the nine months ended September 30, 2012, the Company paid approximately $70.0 million to acquire products rights and licenses, the majority of which relates to two dermatological products acquired from Valeant Pharmaceuticals.

- 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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