Goodwill and Intangible Assets

12 Months Ended

Dec. 31, 2012

4.	Goodwill and Intangible Assets

The changes in the carrying amount of goodwill for 2012 and 2011, by business segment, were as follows:


	Fluid & Metering Technologies			Health & Science Technologies			Fire & Safety/ Diversified Products			Total
Goodwill	$	551,064		$	418,776		$	273,910		$	1,243,750
Accumulated impairment losses		(6,659	)		—			(30,090	)		(36,749	)

Balance at January 1, 2011⁽¹⁾		544,405			418,776			243,820			1,207,001
Acquisition adjustments		—			434			—			434
Acquisitions (Note 12)		—			231,189			—			231,189
Foreign currency translation		(2,765	)		(1,493	)		(3,000	)		(7,258	)

Balance at December 31, 2011⁽¹⁾		541,640			648,906			240,820			1,431,366
Acquisition adjustments		—			1,424			—			1,424
Acquisitions (Note 12)		—			50,387			—			50,387
Foreign currency translation		3,406			2,307			3,378			9,091
Goodwill impairment		(20,721	)		(149,820	)		—			(170,541	)

Balance at December 31, 2012	$	524,325		$	553,204		$	244,198		$	1,321,727

(1)

Revised to reflect the movement of the Dispensing Equipment segment to the Fire & Safety/Diversified Products segment and the transfer of $20.6 million of goodwill related to the movement of our Trebor business unit from the Health & Science Technologies segment to the Fluid & Metering Technologies segment.

ASC 350 requires that goodwill be tested for impairment at the reporting unit level on an annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying value. Goodwill represents the purchase price in excess of the net amount assigned to assets acquired and liabilities assumed.

In prior periods, the Company disclosed certain reporting units for which the estimated fair value did not significantly exceed carrying value. Assumptions used in estimating fair value included successful execution of business forecasts and favorable market conditions. Consistent with the Company’s approach in its annual impairment testing, in assessing the fair value of the reporting units, the Company considered both the market approach and income approach. Under the market approach, the fair value of the reporting unit is based on comparing the reporting unit to comparable publicly traded companies. Under the income approach, the fair value of the reporting unit is based on the present value of estimated future cash flows. The income approach is dependent on a number of significant management assumptions including estimates of operating results, capital expenditures, other operating costs and discount rates. Weighting was equally attributed to both the market and income approaches (50% each) in arriving at the fair value of the reporting units. As a result of our annual impairment test for the IOP reporting unit and as a result of the reorganization of certain FMT reporting units, the Company determined that the fair value of the IOP and WST reporting units was less than the carrying value of the net assets of the reporting units, and thus the Company performed step two of the goodwill impairment test.

In step two of the goodwill impairment test, the Company determined the implied fair value of the goodwill and compared it to the carrying value, which resulted in a $149.8 million goodwill impairment charge at the IOP reporting unit and a $20.7 million goodwill impairment charge at the WST reporting unit.

The following table provides the gross carrying value and accumulated amortization for each major class of intangible asset at December 31, 2012 and 2011:


	At December 31, 2012									At December 31, 2011
	Gross Carrying Amount		Accumulated Amortization			Net		Weighted Average Life		Gross Carrying Amount		Accumulated Amortization			Net
			(In thousands)									(In thousands)
Amortizable intangible assets:
Patents	$	10,650	$	(4,273	)	$	6,377		11	$	11,506	$	(4,315	)	$	7,191
Trade names		103,113		(21,603	)		81,510		16		72,823		(18,205	)		54,618
Customer relationships		230,196		(93,273	)		136,923		10		221,076		(69,280	)		151,796
Non-compete agreements		3,505		(2,827	)		678		3		4,801		(4,053	)		748
Unpatented technology		74,758		(24,211	)		50,547		11		70,741		(15,617	)		55,124
Other		6,841		(3,604	)		3,237		10		6,793		(3,156	)		3,637

Total amortizable intangible assets		429,063		(149,791	)		279,272				387,740		(114,626	)		273,114
Unamortized intangible assets:
Banjo trade name		62,100		—			62,100				62,100		—			62,100
CVI Melles Griot trade name		—		—			—				47,008		—			47,008

Total intangible assets	$	491,163	$	(149,791	)	$	341,372			$	496,848	$	(114,626	)	$	382,222

The unamortized Banjo trade name and the CVI Melles Griot trade names were determined to be indefinite lived intangible assets which are tested for impairment on an annual basis in accordance with ASC 350 or more frequently if events or changes in circumstances indicate that the asset might be impaired. Consistent with the Company’s approach in its annual impairment testing in assessing the fair value of the indefinite lived intangible assets, the Company used the relief-from-royalty method, a form of the income approach. The relief-from-royalty method is dependent of a number of significant management assumptions, including estimates of revenues, royalty rates and discount rates. As a result of our annual impairment test, the Company concluded that the fair value of the CVI Melles Griot trade names within the IOP reporting unit was less than the carrying value, resulting in a $21.0 million impairment charge. The Company also determined that the CVI Melles Griot trade names no longer had an indefinite life and reclassified the remaining $26.0 million to definite lived assets that will be amortized over a remaining useful life of 15 years.

A long-lived asset impairment exists when the carrying amount of the asset exceeds its fair value. Assessments of possible impairments of long-lived assets are made when events or changes in circumstances indicate that the carrying value of the asset may not be recoverable through future operations. The amount and timing of impairment charges for these assets require the estimation of future cash flows and the fair value of the related assets. Due to continued market softness in municpal end markets, the Company concluded that certain long lived assets within the WST reporting unit had a fair value that was less than the carrying value of the assets, resulting in a $7.0 million impairment charge.

Amortization of intangible assets was $41.5 million, $35.5 million and $25.7 million in 2012, 2011 and 2010, respectively. Based on intangible asset balances as of December 31, 2012, amortization expense is expected to approximate $43.7 million in 2013, $41.6 million in 2014, $39.4 million in 2015, $37.5 million in 2016 and $28.4 million in 2017.

- 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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