Goodwill & Other Intangible Assets

12 Months Ended

Dec. 31, 2012

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL & OTHER INTANGIBLE ASSETS

As discussed in Note 2, goodwill arises from the purchase price for acquired businesses exceeding the fair value of tangible and intangible assets acquired less assumed liabilities and non-controlling interests. Management assesses the goodwill of each of its reporting units for impairment at least annually at the beginning of the fourth quarter and as “triggering” events occur that indicate that it is more likely than not that an impairment exists.

During 2012, accounting guidance became effective that simplifies how entities test goodwill for impairment. The guidance permits the Company to first assess qualitative factors to determine whether it is more likely than not (defined as having a likelihood of more than 50 percent) that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. Alternatively, the Company may decide to proceed directly to the two-step goodwill impairment test. The Company may resume performing the qualitative assessment in any subsequent period. For 2012, the Company elected to bypass the optional qualitative assessment and performed a quantitative impairment test for all reporting units as this was determined to be the most effective method to assess for impairment across a large spectrum of reporting units.

The Company estimates the fair value of its reporting units primarily using a market based approach. The market based approach is based on earnings before interest, taxes, depreciation and amortization (“EBITDA”) multiples determined by current trading market multiples of earnings for companies operating in businesses similar to each of the Company's reporting units, in addition to recent available market precedent transactions of comparable businesses. In evaluating the estimates derived by the market based approach, management assesses the relevance and reliability of the multiples by considering factors unique to its reporting units, including operating results, business plans, economic projections, anticipated future cash flows and transactions and marketplace data. In certain circumstances the Company also estimates fair value utilizing a discounted cash flow analysis (i.e., an income approach) in order to validate the results of the market approach. If the estimated fair value of the reporting unit is less than its carrying value, the Company must perform additional analysis to determine if the reporting unit's goodwill has been impaired.

As of December 31, 2012, the Company had twenty-one reporting units for goodwill impairment testing. The carrying value of the goodwill included in each individual reporting unit ranges from approximately $7 million to approximately $3.9 billion. The Company’s annual impairment test was performed as of the first day of the Company’s fiscal fourth quarters of 2012, 2011 and 2010 and no impairment was identified in any period. Reporting units resulting from recent acquisitions generally present the highest risk of impairment. Management believes the impairment risk associated with these reporting units typically decreases as such businesses are integrated into the Company and positioned for improved future earnings growth. The factors used by management in its impairment analysis are inherently subject to uncertainty. While the Company believes it has made reasonable estimates and assumptions to calculate the fair value of its reporting units, if actual results are not consistent with management’s estimates and assumptions, goodwill and other intangible assets may be overstated and a charge would need to be taken against net earnings.

The following table shows the rollforward of goodwill reflected in the financial statements resulting from the Company’s activities during 2012 and 2011 ($ in millions).



	Test & Measurement			Environmental			Life Sciences & Diagnostics			Dental			Industrial Technologies			Total
Balance, January 1, 2011	$	3,001.6		$	1,383.6		$	2,122.4		$	2,114.5		$	1,771.6		$	10,393.7
Attributable to 2011 acquisitions	35.4			90.6			3,758.3			2.8			277.6			4,164.7
Adjustments due to finalization of purchase price allocations	0.4			(3.9		)	(5.7		)	26.8			—			17.6
Effect of foreign currency translation	0.6			(21.1		)	(33.0		)	(22.0		)	(26.2		)	(101.7		)
Balance, December 31, 2011	3,038.0			1,449.2			5,842.0			2,122.1			2,023.0			14,474.3
Attributable to 2012 acquisitions	187.9			104.6			356.2			32.6			334.4			1,015.7
Adjustments due to finalization of purchase price allocations	(2.5		)	(6.8		)	(0.9		)	(1.6		)	0.9			(10.9		)
Effect of foreign currency translation	(1.3		)	7.9			(58.4		)	14.9			19.8			(17.1		)
Balance, December 31, 2012	$	3,222.1		$	1,554.9		$	6,138.9		$	2,168.0		$	2,378.1		$	15,462.0

Finite-lived intangible assets are amortized over their legal or estimated useful life. The following summarizes the gross carrying value and accumulated amortization for each major category of intangible asset ($ in millions):



	December 31, 2012					December 31, 2011
	Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization
Finite–Lived Intangibles:
Patents and technology	$	1,289.2	$	(499.5	)	$	1,180.0	$	(384.8	)
Customer relationships and other intangibles	3,528.1		(863.8		)	3,009.0		(633.2		)
Total finite–lived intangibles	4,817.3		(1,363.3		)	4,189.0		(1,018.0		)
Indefinite–Lived Intangibles:
Trademarks and trade names	2,890.0		—			2,669.2		—
Total intangibles	$	7,707.3	$	(1,363.3	)	$	6,858.2	$	(1,018.0	)

During 2012, the Company acquired finite-lived intangible assets, consisting primarily of customer relationships and patents, with a weighted average life of 13 years. Refer to Note 2 for additional information on the intangible assets acquired.

Total intangible amortization expense in 2012, 2011 and 2010 was $342 million, $284 million and $199 million, respectively. Based on the intangible assets recorded as of December 31, 2012, amortization expense is estimated to be $364 million during 2013, $327 million during 2014, $294 million during 2015, $265 million during 2016 and $238 million during 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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