Intangible Assets and Goodwill

9 Months Ended

Sep. 30, 2012

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible assets

Intangible assets at September 30, 2012 and December 31, 2011 consisted of the following:



	September 30, 2012							December 31, 2011
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Customer relationships	$	406,746	$	(260,737	)	$	146,009	$	409,489	$	(237,536	)	$	171,953
Supplier relationships	29,000		(21,387		)	7,613		29,000		(19,213		)	9,787
Software & technology	168,912		(149,360		)	19,552		170,286		(143,456		)	26,830
Trademarks & trade names	34,844		(32,101		)	2,743		33,908		(30,076		)	3,832
Non-compete agreements	7,487		(7,409		)	78		7,564		(7,363		)	201
Total intangible assets	$	646,989	$	(470,994	)	$	175,995	$	650,247	$	(437,644	)	$	212,603

Amortization expense for intangible assets was $10 million and $14 million for the three months ended September 30, 2012 and 2011, respectively, and $35 million and $43 million for the nine months ended September 30, 2012 and 2011, respectively. We also recorded impairment charges of $3 million to write-down the carrying values of certain intangible assets associated with our International Mail Services business to their respective fair values. See Goodwill section below for further details of the impairment charge and method of determining fair value.

The future amortization expense for intangible assets as of September 30, 2012 was as follows:



Remaining for year ended December 31, 2012	$	10,222
Year ended December 31, 2013	39,429
Year ended December 31, 2014	36,774
Year ended December 31, 2015	32,812
Year ended December 31, 2016	24,182
Thereafter	32,576
Total	$	175,995

Actual amortization expense may differ from the amounts above due to, among other things, fluctuations in foreign currency exchange rates, impairments, future acquisitions and accelerated amortization.

Goodwill

We perform our annual goodwill impairment test during the fourth quarter of each year, or sooner, if circumstances indicate an impairment may exist. Based on the recent performance of our International Mail Services (IMS) business and to enable us to better focus on higher growth cross-border ecommerce parcel opportunities, in the third quarter of 2012, we began exploring strategic alternatives for the IMS business. In October 2012, we made a strategic decision to exit the IMS business related to the international delivery of mail and catalogs. We are engaged in negotiations with potential buyers and have received preliminary indications of interest and written offers. As a result of these factors, we concluded that it was more likely than not that the fair value of the IMS reporting unit was below its book value and an interim impairment test was performed. The fair value of the reporting unit was determined in combination of the written offers received as well as applying an income approach with revised cash flow projections. The inputs used to determine the fair value of the IMS business are classified as Level 3 in the fair value hierarchy. Based on the results of our impairment test, a non-cash goodwill impairment charge of $18 million was recorded in the third quarter of 2012 to write-down the carrying value of goodwill associated with the IMS business to its implied fair value.

The changes in the carrying amount of goodwill, by reporting segment, for the nine months ended September 30, 2012 were as follows:



	Gross value before accumulated impairment		Accumulated impairment			December 31, 2011		Impairment			Other (1)			September 30, 2012
North America Mailing	$	352,897	$	—		$	352,897	$	—		$	(178	)	$	352,719
International Mailing	189,067		—			189,067		—			(8,105		)	180,962
Small & Medium Business Solutions	541,964		—			541,964		—			(8,283		)	533,681
Production Mail	127,589		—			127,589		—			2,603			130,192
Software	667,124		—			667,124		—			3,479			670,603
Management Services	487,223		(84,500		)	402,723		—			542			403,265
Mail Services	259,105		(45,650		)	213,455		(18,315		)	—			195,140
Marketing Services	194,233		—			194,233		—			—			194,233
Enterprise Business Solutions	1,735,274		(130,150		)	1,605,124		(18,315		)	6,624			1,593,433
Total	$	2,277,238	$	(130,150	)	$	2,147,088	$	(18,315	)	$	(1,659	)	$	2,127,114


(1)	Primarily foreign currency translation adjustments.

- 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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