Goodwill and Intangible Assets, Net

6 Months Ended

Jun. 30, 2011

Goodwill and Intangible Assets, Net [Abstract]

Note 5: Goodwill and Intangible Assets, Net

Goodwill

Under the accounting guidance, the unit of accounting for goodwill is at a level of reporting referred to as a “reporting unit.” A reporting unit is either (1) an operating segment or (2) one level below an operating segment — referred to as a component. During the fourth quarter 2010, as a result of us flattening our management structure, and the acquisition of Enson we merged our international component with our domestic component. We no longer have separate management of the international component, and the financial results of our international component are not separate. In addition, these components have similar economic characteristics. As a result of these changes, our domestic and international components have been merged into our single operating segment.

The goodwill on June 30, 2011 and changes in the carrying amount of goodwill during the six months ended June 30, 2011 were the following:


(in thousands)
Balance at December 31, 2010	$	30,877
Goodwill adjustments ⁽¹⁾		156

Balance at June 30, 2011	$	31,033


⁽¹⁾		The adjustment included in international goodwill was the result of fluctuations in the foreign currency exchange rates used to translate the balance into U.S. dollars.

Please see Note 2 under the captions Goodwill and Fair-Value Measurements in our Annual Report on Form 10-K for further information regarding our accounting principles and the valuation methodology utilized.

Intangible Assets, net

The components of intangible assets, net on June 30, 2011 and December 31, 2010 were the following:


	June 30, 2011							December 31, 2010
			Accumulated							Accumulated
(In thousands)	Gross		Amortization			Net		Gross		Amortization			Net
Carrying amount⁽¹⁾:
Distribution rights (10 years)	$	417	$	(56	)	$	361	$	384	$	(51	)	$	333
Patents (10 years)		9,005		(4,926	)		4,079		8,612		(4,589	)		4,023
Trademarks and trade names (10 years) ⁽²⁾		2,834		(700	)		2,134		2,836		(565	)		2,271
Developed and core technology (5-15 years)		3,500		(554	)		2,946		3,500		(438	)		3,062
Capitalized software development costs (1-2 years)		1,974		(1,422	)		552		1,896		(1,165	)		731
Customer relationships (10-15 years)⁽³⁾		26,325		(2,039	)		24,286		26,349		(775	)		25,574

Total carrying amount	$	44,055	$	(9,697	)	$	34,358	$	43,577	$	(7,583	)	$	35,994


⁽¹⁾		This table excludes fully amortized intangible assets of $7.6 million and $7.6 million on June 30, 2011 and December 31, 2010, respectively.

⁽²⁾		As part of our acquisition of Enson Assets Limited during the fourth quarter of 2010, we purchased trademark and trade names valued at $2.0 million, which are being amortized ratably over ten years. Refer to Note 18 for further information regarding this purchase of trademark and trade names.

⁽³⁾		During the fourth quarter of 2010 as part of the Enson Assets Limited acquisition we purchased customer relationships valued at $23.3 million, which are being amortized ratably over ten years. Refer to Note 18 for further information regarding this purchase of these customer relationships.

Amortization expense is recorded in selling, general and administrative expenses, except amortization expense related to capitalized software development costs which is recorded in cost of sales. Amortization expense by income statement caption for the three and six months ended June 30, 2011 and 2010 is the following:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
(In thousands)	2011		2010		2011		2010
Cost of sales	$	126	$	109	$	257	$	225
Selling, general and administrative		954		312		1,895		623

Total amortization expense	$	1,080	$	421	$	2,152	$	848

Estimated future amortization expense related to our intangible assets on June 30, 2011, is the following:


(In thousands)
2011 (remaining 6 months)	$	2,141
2012		4,146
2013		3,852
2014		3,814
2015		3,751
Thereafter		16,654

Total	$	34,358

Intangibles Measured at Fair Value on a Nonrecurring Basis

We recorded impairment charges related to our intangible assets of $7 thousand and $8 thousand during the three and six months ended June 30, 2011. Impairment charges are recorded in selling, general and administrative expenses as a component of amortization expense, except impairment charges related to capitalized software development costs which are recorded in cost of sales. The fair value adjustments for intangible assets measured at fair value on a nonrecurring basis during the six months ended June 30, 2011 were comprised of the following:

Fair Value Measurement Using

Quoted Prices in

Active Markets

for Identical

Significant Other

Significant

(In thousands)

Six Months Ended

Assets

Observable Inputs

Unobservable Inputs

Total

Description

June 30, 2011

(Level 1)

(Level 2)

(Level 3)

Gains (Losses)

Patents, trademarks and trade names

6,213

—

6,213

)

We disposed of four patents and eleven trademarks with an aggregate carrying amount of $8 thousand resulting in impairment charges of $8 thousand during the six months ended June 30, 2011. We disposed of one patent and eight trademarks with an aggregate carrying amount of $7 thousand during the six months ended June 30, 2010. The intangible assets disposed of during the six months ended June 20, 2011 and 2010 no longer hold any probable future economic benefits and were written-off.

See Note 2 under the captions Long-Lived Assets and Intangible Assets Impairment, Capitalized Software Development Costs, and Fair-Value Measurements in our Annual Report on Form 10-K for further information regarding our accounting principles and valuation methodology utilized.

- 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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