GOODWILL AND INTANGIBLE ASSETS

12 Months Ended

Dec. 31, 2012

Notes to Financial Statements [Abstract]

The Company performed the required annual impairment tests of goodwill as of April 30, 2012 on thirteen reporting units. To determine the fair value of the Company’s reporting units, the Company uses a discounted cash flow model with market-based support as its valuation technique to measure the fair value for its reporting units. The discounted cash flow model uses five-year forecasted cash flows plus a terminal value based on a multiple of earnings. In addition, the Company applies gross margin and operating expense assumptions consistent with historical trends. The total cash flows were discounted based on a range between 8.5% to 10.5%, which included assumptions regarding the Company’s weighted-average cost of capital. The Company considered the current market conditions both in the U.S. and globally, when determining its assumptions. Lastly, the Company reconciled the aggregated fair values of its reporting units to its market capitalization, which included a reasonable control premium based on market conditions. As a result of the annual impairment tests of goodwill, no impairment was identified.

Impairments of identifiable definite-lived and indefinite-lived intangible assets for the years ended December 31, 2012, 2011 and 2010 were $5.2 million, $1.5 million and $0.4 million, respectively.

A reconciliation of changes in the Company’s goodwill is as follows:



	December 31,
(in thousands)	2012			2011

Balance, beginning of the year	$	2,190,063		$	1,303,055
Acquisition activity	867			978,191
Additional consideration for post closing adjustments	6,574			2,833
Adjustment of provisional amounts on prior acquisition	(22,516		)	—
Effect of exchange rate changes	35,965			(94,016		)
Balance, end of the year	$	2,210,953		$	2,190,063

Goodwill by reportable segment is as follows:



	December 31,
(in thousands)	2012		2011

Dental Consumable and Laboratory Businesses	$	488,206	$	484,779
Orthodontics/Canada/Mexico/Japan	102,065		102,950
Select Distribution Businesses	92,473		108,566
Implants/Endodontics/Healthcare/Pacific Rim	1,528,209		1,493,768
Total	$	2,210,953	$	2,190,063

During 2012, the Company transferred goodwill of approximately $13.2 million from the Select Distribution Businesses segment to the Implants/Endodontics/Healthcare/Pacific Rim segment due to changes in reporting units resulting from the integration of the implant businesses.

Identifiable definite-lived and indefinite-lived intangible assets consist of the following:



	December 31, 2012							December 31, 2011
(in thousands)	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount

Patents	$	179,512	$	(81,390	)	$	98,122	$	131,252	$	(17,393	)	$	113,859
Trademarks	83,073		(33,129		)	49,944		73,413		(23,885		)	49,528
Licensing agreements	30,695		(18,966		)	11,729		30,444		(17,277		)	13,167
Customer relationships	491,859		(50,632		)	441,227		411,626		(19,066		)	392,560
Total definite-lived	$	785,139	$	(184,117	)	$	601,022	$	646,735	$	(77,621	)	$	569,114

Trademarks and In-process R&D	$	229,620	$	—		$	229,620	$	221,986	$	—		$	221,986

Total identifiable intangible assets	$	1,014,759	$	(184,117	)	$	830,642	$	868,721	$	(77,621	)	$	791,100

Amortization expense for identifiable definite-lived intangible assets for 2012, 2011 and 2010 was $49.7 million, $21.0 million and $9.0 million, respectively. The annual estimated amortization expense related to these intangible assets for each of the five succeeding fiscal years is $46.4 million, $45.6 million, $45.5 million, $45.1 million and $44.4 million for 2013, 2014, 2015, 2016 and 2017, 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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