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Intangible Assets and Goodwill

3 Months Ended

Sep. 30, 2011

Notes To Condensed Consolidated Financial Statements [Abstract]

5. Intangible Assets and Goodwill

Intangible assets

Intangible assets at September 30, 2011 and December 31, 2010 consisted of the following:

	September 30, 2011						December 31, 2010
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Customer relationships	$	426,136	$	(239,486)	$	186,650	$	453,523	$	(229,143)	$	224,380
Supplier relationships		29,000		(18,367)		10,633		29,000		(16,192)		12,808
Software & technology		170,910		(129,447)		41,463		172,188		(118,390)		53,798
Trademarks & trade names		36,141		(31,766)		4,375		36,322		(30,224)		6,098
Non-compete agreements		7,690		(7,462)		228		7,845		(7,486)		359
Total intangible assets	$	669,877	$	(426,528)	$	243,349	$	698,878	$	(401,435)	$	297,443

Amortization expense related to intangible assets was $14 million and $15 million for the three months ended September 30, 2011 and 2010, respectively, and $43 million and $48 million for the nine months ended September 30, 2011 and 2010, respectively. In the third quarter 2011, we also recorded impairment charges totaling $12 million associated with our International Mailing Services (IMS) operations within our Mail Services segment. These charges were recorded in restructuring charges and asset impairments in the Condensed Consolidated Statements of Income. See Goodwill section below and Note 14 for further details. The future amortization expense as of September 30, 2011 is as follows:

	Amount
Remaining for year ended December 31, 2011	$	14,045
Year ended December 31, 2012		51,241
Year ended December 31, 2013		46,979
Year ended December 31, 2014		40,880
Year ended December 31, 2015		33,926
Thereafter		56,278
Total	$	243,349

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

Goodwill

We perform our annual goodwill impairment test during the fourth quarter of each year, or sooner, if circumstances indicate an impairment may exist. Due to continuing underperformance of our IMS operations and in connection with the company's long-term planning and budgeting process during the third quarter, management concluded that it was appropriate to perform a goodwill impairment review for IMS at September 30, 2011.

We determined the fair value of IMS using a combination of techniques including the present value of future cash flows, multiples of competitors and multiples from sales of like businesses. We derived the cash flow estimates from our historical experience and our long-term plans. We then allocated the implied fair value to the assets and liabilities of the reporting unit as if it had just been acquired in a business combination. Based on our analysis, it was determined that the estimated fair value of IMS was less than its carrying value, and a goodwill impairment charge of $46 million was recognized during the third quarter.

The changes in the carrying amount of goodwill, by reporting segment, for the nine months ended September 30, 2011 is as follows:

	Balance at December 31, 2010		Impairment		Other (1)		Balance at September 30, 2011
North America Mailing	$	357,918	$	-	$	(1,047)	$	356,871
International Mailing		181,530		-		(584)		180,946
Small & Medium Business Solutions		539,448		-		(1,631)		537,817

Production Mail		141,476		-		280		141,756
Software		678,101		-		(6,404)		671,697
Management Services		494,433		-		(4,449)		489,984
Mail Services		259,102		(45,650)		3		213,455
Marketing Services		194,233		-		-		194,233
Enterprise Business Solutions		1,767,345		(45,650)		(10,570)		1,711,125
Total	$	2,306,793	$	(45,650)	$	(12,201)	$	2,248,942

(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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