Intangible Assets and Goodwill

6 Months Ended

Jun. 30, 2020

Intangible Assets and Goodwill

Intangible Assets and Goodwill

Note 4 – Intangible Assets and Goodwill

Intangible assets consist of the following at:

$'s in 000's	Useful Lives	June 30, 2020		December 31, 2019
Amortizable intangibles
Certification	7 years	$	350	$	350
Customer relationships	12-20 years		89,160		89,232
Patents and processes	5-10 years		4,810		4,928
Brand names	5-15 years		14,962		15,019
Total amortizable intangibles			109,282		109,529
Less accumulated amortization			(17,405)		(13,058)
Total net amortizable intangibles			91,877		96,471
Non-amortizable intangibles
Trademarks and other			18,016		18,016
In-process research and development			5,469		5,469
Intangible assets, net of accumulated amortization		$	115,362	$	119,956

Certain intangible assets are denominated in currencies other than the U.S. Dollar; therefore, their gross and net carrying values are subject to foreign currency movements. Amortization expense for the three months ended June 30, 2020 and 2019 was $2.3 million and $1.3 million, respectively, and $4.5 million and $2.6 million for the six months ended June 30, 2020 and 2019, respectively.

The in-process research and development (“IPRD”), intangible assets represent the value assigned to acquired R&D projects that principally represent rights to develop and sell a product that the Company has acquired which have not yet been completed or approved. The IPRD acquired as part of the Perrigo Animal Health Acquisition is accounted for as an indefinite-lived asset until the product is available for sale and regulatory approval is obtained, or abandonment of the associated research and development efforts. If the research and development efforts are successfully completed, the IPRD would be amortized over its then estimated useful life. The fair value of the IPRD was estimated using the multi-period excess earnings income method. The projected cash flows estimates for the future products were based on certain key assumptions including estimates of future revenues and expenses, taking into account the stage of development at the acquisition date and the resources needed to complete development.

Estimated future amortization expense for each of the following years is as follows:

Years ending December 31, ($'s in 000's)
Remainder of 2020	$	4,479
2021		8,950
2022		9,151
2023		8,793
2024		6,787
Thereafter		53,717

The following is a summary of the changes in the carrying value of goodwill for the period from January 1, 2019 to June 30, 2020:

	Reporting Unit
($'s in 000's)	Products		Services		Total
Goodwill as of January 1, 2019		77,765		47,264		125,029
Foreign currency translation		178		—		178
Acquisitions		105,838		—		105,838
Goodwill as of December 31, 2019		183,781		47,264		231,045
Foreign currency translation		(387)		—		(387)
Goodwill as of June 30, 2020	$	183,394	$	47,264	$	230,658