Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2011

Goodwill and Other Intangible Assets

(8) Goodwill and Other Intangible Assets

The changes in the carrying amount of goodwill, by reportable segment and our other operating segments, were as follows:

	December 31, 2009			Goodwill resulting from business combinations		Impairments		Foreign Currency Translation and other(2)			December 31, 2010			Goodwill resulting from business combinations		Impairments(1)			Foreign Currency Translation and other(2)			December 31, 2011

Flow Technology reportable segment
Gross Goodwill	$	652.2		$	53.8	$	—	$	(3.3	)	$	702.7		$	324.8	$	—		$	(7.6	)	$	1,019.9
Accumulated Impairments		—			—		—		—			—			—		—			—			—

Goodwill		652.2			53.8		—		(3.3	)		702.7			324.8		—			(7.6	)		1,019.9

Thermal Equipment and Services reportable segment
Gross Goodwill		622.6			—		—		(20.0	)		602.6			—		—			(4.8	)		597.8
Accumulated Impairments		(114.1	)		—		—		—			(114.1	)		—		(20.8	)		—			(134.9	)

Goodwill		508.5			—		—		(20.0	)		488.5			—		(20.8	)		(4.8	)		462.9

Industrial Products and Services
Gross Goodwill		470.1			7.3		—		(25.9	)		451.5			—		—			(0.9	)		450.6
Accumulated Impairments		(185.8	)		—		—		26.0			(159.8	)		—		—			0.1			(159.7	)

Goodwill		284.3			7.3		—		0.1			291.7			—		—			(0.8	)		290.9

Total
Gross Goodwill		1,744.9			61.1		—		(49.2	)		1,756.8			324.8		—			(13.3	)		2,068.3
Accumulated Impairments		(299.9	)		—		—		26.0			(273.9	)		—		(20.8	)		0.1			(294.6	)

Goodwill	$	1,445.0		$	61.1	$	—	$	(23.2	)	$	1,482.9		$	324.8	$	(20.8	)	$	(13.2	)	$	1,773.7

(1): Impairment charges totaled $20.8 during the year ended December 31, 2011 related to our SPX Heat Transfer Inc. reporting unit.
(2): Includes adjustments resulting from recent acquisitions not consummated during the year ended December 31, 2011 and 2010 of $(3.8) and $(5.8), respectively, and changes from foreign currency translation adjustments for the year ended December 31, 2011 and 2010 of $(9.4) and $(17.4), respectively.

Identifiable intangible assets comprised the following:

	December 31, 2011							December 31, 2010

	Gross Carrying Value		Accumulated Amortization			Net Carrying Value		Gross Carrying Value		Accumulated Amortization			Net Carrying Value
Intangible assets with determinable lives⁽¹⁾:
Patents	$	8.5	$	(7.6	)	$	0.9	$	13.9	$	(12.6	)	$	1.3
Technology		182.2		(30.5	)		151.7		115.4		(22.9	)		92.5
Customer relationships		400.4		(44.7	)		355.7		165.2		(33.3	)		131.9
Other:		38.7		(11.0	)		27.7		27.8		(9.1	)		18.7

		629.8		(93.8	)		536.0		322.3		(77.9	)		244.4
Trademarks with indefinite lives⁽²⁾:		436.4		—			436.4		369.6		—			369.6

Total	$	1,066.2	$	(93.8	)	$	972.4	$	691.9	$	(77.9	)	$	614.0

⁽¹⁾: The identifiable intangible assets associated with the Clyde Union acquisition consist of trademarks, customer lists, customer relationships and technology of $76.8, $14.7, $234.3 and $59.6, respectively, with such amounts based on a preliminary assessment of the related fair values.
⁽²⁾: Balance reflects impairment charges recorded during 2011 associated with businesses within our Thermal Equipment and Services reportable segment and Industrial Products and Services of $7.5 and $0.8, respectively, and an impairment charge associated with a business within our Thermal Equipment and Services reportable segment of $1.7 in 2010.

Amortization expense was $23.3, $20.7 and $14.3 for the years ended December 31, 2011, 2010 and 2009, respectively. Estimated amortization expense related to these intangible assets is $46.1 in 2012, $37.4 in 2013, $33.6 in 2014, $32.7 in 2015, and $31.8 in 2016.

At December 31, 2011, the net carrying value of intangible assets with determinable lives consisted of $467.2 in the Flow Technology reportable segment, $57.9 in the Thermal Equipment and Services reportable segment, and $10.9 in Industrial Products and Services. Trademarks with indefinite lives consisted of $282.3 in the Flow Technology reportable segment, $130.2 in the Thermal Equipment and Services reportable segment, and $23.9 in Industrial Products and Services.

Consistent with the requirements of the Intangible — Goodwill and Other Topic of the Codification, the fair values of our reporting units generally are estimated using discounted cash flow projections that we believe to be reasonable under current and forecasted circumstances, the results of which form the basis for making judgments about carrying values of the reported net assets of our reporting units. Other considerations are also incorporated, including comparable industry price multiples. Many of our reporting units closely follow changes in the industries and end markets that they serve. Accordingly, we consider estimates and judgments that affect the future cash flow projections, including principal methods of competition such as volume, price, service, product performance and technical innovations and estimates associated with cost improvement initiatives, capacity utilization and assumptions for inflation and foreign currency changes. Any significant change in market conditions and estimates or judgments used to determine expected future cash flows that indicate a reduction in carrying value may give rise to impairment in the period that the change becomes known.

We perform our annual goodwill impairment testing during the fourth quarter in conjunction with our annual financial planning process, with such testing based primarily on events and circumstances existing as of the end of the third quarter. In addition, we test goodwill for impairment on a more frequent basis if there are indications of potential impairment.

In connection with our annual goodwill impairment testing in 2010, we determined that the estimated fair value of our SPX Heat Transfer Inc. reporting unit was comparable to the carrying value of its net assets. In the second quarter of 2011, SPX Heat Transfer Inc. experienced a decline in its revenues and profitability, furthering a trend that began late in the first quarter of 2011, in comparison to (i) recent historical results and (ii) expected results for the period, due to the challenging conditions within the U.S. power market. As such, during the second quarter of 2011, we updated the projection of future discounted cash flows for SPX Heat Transfer Inc. which indicated that the reporting unit's fair value was less than the carrying value of its net assets. Accordingly, we recorded an impairment charge of $24.7 during the second quarter of 2011 associated with SPX Heat Transfer Inc.'s goodwill ($17.2) and indefinite-lived intangible assets ($7.5). In connection with our annual goodwill impairment testing during the fourth quarter of 2011, and in consideration of a further decline in SPX Heat Transfer Inc.'s revenue and profitability, we determined that the remaining goodwill ($3.6) of the reporting unit was impaired and, thus, recorded an impairment charge of $3.6 during the fourth quarter of 2011. After the aggregate impairment charge in 2011 of $28.3, SPX Heat Transfer Inc. had indefinite-lived intangible assets of $22.6.

The estimated fair value of each of our other reporting units, except for our Cooling Equipment and Services reporting unit ("Cooling"), exceeds the carrying value of their respective net assets by at least 10%. The estimated fair value of Cooling exceeds the carrying value of its net assets by approximately 5%, while the total goodwill for Cooling was $380.8 at December 31, 2011.

During 2009, businesses within our Thermal Equipment and Services reportable segment recorded impairment charges related to other intangible assets of $6.1.

- 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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