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LONG-LIVED ASSETS
6 Months Ended 12 Months Ended
Jul. 02, 2011
Dec. 31, 2010
LONG-LIVED ASSETS    
LONG-LIVED ASSETS

5.  LONG-LIVED ASSETS

 

Goodwill

 

Changes in the carrying amount of our goodwill for the six months ended July 2, 2011 are presented below (in thousands):

 

Balance, beginning of period

 

$

1,188,887

 

Acquisitions (see Note 2)

 

165,491

 

Translation adjustments

 

6,714

 

Balance, end of period

 

$

1,361,092

 

 

Intangible assets, net

 

Identifiable intangible assets consisted of the following (in thousands):

 

July 2, 2011

 

Gross Carrying
Amount

 

Accumulated
Amortization

 

Intangible
Assets, Net

 

Definite-lived intangible assets:

 

 

 

 

 

 

 

Customer relationships

 

$

572,361

 

$

(155,326

)

$

417,035

 

Patents and technology

 

463,308

 

(139,396

)

323,912

 

Trademarks and trade names

 

23,650

 

(586

)

23,064

 

Distributor contracts and relationships

 

3,589

 

(898

)

2,691

 

Non-compete agreements

 

3,663

 

(477

)

3,186

 

 

 

$

1,066,571

 

$

(296,683

)

769,888

 

Indefinite-lived intangible assets:

 

 

 

 

 

 

 

Trademarks and trade names

 

 

 

 

 

430,443

 

Net identifiable intangible assets

 

 

 

 

 

$

1,200,331

 

 

December 31, 2010

 

Gross Carrying
Amount

 

Accumulated
Amortization

 

Intangible
Assets, Net

 

Definite-lived intangible assets:

 

 

 

 

 

 

 

Customer relationships

 

$

484,115

 

$

(130,362

)

$

353,753

 

Patents and technology

 

447,437

 

(119,985

)

327,452

 

Distributor contracts and relationships

 

789

 

(482

)

307

 

Non-compete agreements

 

459

 

(129

)

330

 

 

 

$

932,800

 

$

(250,958

)

681,842

 

Indefinite-lived intangible assets:

 

 

 

 

 

 

 

Trademarks and trade names

 

 

 

 

 

428,999

 

Net identifiable intangible assets

 

 

 

 

 

$

1,110,841

 

 

Our definite-lived intangible assets are being amortized using the straight-line method over their remaining weighted average useful lives of 7.9 years for customer relationships, 10.8 years for patents and technology, 5.7 years for distributor rights and 9.7 years for trademarks and trade names. Based on our amortizable intangible asset balance as of July 2, 2011, we estimate that amortization expense will be as follows for the next five years and thereafter (in thousands):

 

Remaining 2011

 

$

49,151

 

2012

 

97,091

 

2013

 

91,148

 

2014

 

89,063

 

2015

 

84,570

 

Thereafter

 

358,865

 

 

 

$

769,888

 

 

 

 

9.                                     LONG-LIVED ASSETS

 

Goodwill

 

Changes in the carrying amount of goodwill are presented in the table below (in thousands):

 

 

 

Year Ended December 31,

 

 

 

2010

 

2009

 

Balance, beginning of year

 

$

1,191,497

 

$

1,191,566

 

Acquisitions (see Note 4)

 

64

 

9,155

 

Sale of business (see Note 5)

 

 

(11,986

)

Foreign currency translation

 

(2,674

)

2,762

 

Balance, end of year

 

$

1,188,887

 

$

1,191,497

 

 

Identifiable intangible assets consisted of the following (in thousands):

 

December 31, 2010

 

Gross Carrying
Amount

 

Accumulated
Amortization

 

Intangible
Assets, Net

 

Definite-lived intangible assets:

 

 

 

 

 

 

 

Customer-based

 

$

485,363

 

$

(130,973

)

$

354,390

 

Technology-based

 

447,437

 

(119,985

)

327,452

 

 

 

$

932,800

 

$

(250,958

)

681,842

 

Indefinite-lived intangible assets:

 

 

 

 

 

 

 

Trademarks and trade names

 

 

 

 

 

428,999

 

Net identifiable intangible assets

 

 

 

 

 

$

1,110,841

 

 

December 31, 2009

 

Gross Carrying
Amount

 

Accumulated
Amortization

 

Intangible
Assets, Net

 

Definite-lived intangible assets:

 

 

 

 

 

 

 

Customer-based

 

$

490,587

 

$

(97,067

)

$

393,522

 

Technology-based

 

458,732

 

(94,346

)

364,386

 

 

 

$

949,321

 

$

(191,413

)

757,908

 

Indefinite-lived intangible assets:

 

 

 

 

 

 

 

Trademarks and trade names

 

 

 

 

 

429,769

 

Net identifiable intangible assets

 

 

 

 

 

$

1,187,677

 

 

Our 2010 annual impairment test did not result in impairment to any of our indefinite-lived intangible assets. As a result of our 2009 annual impairment test, we determined that the fair value of two of our trade names were less than the carrying amount, resulting in an aggregate $7.0 million impairment charge, of which $3.9 million was related to our Bracing and Supports Segment, and $3.1 million was related to our Recovery Sciences Segment. As a result of our 2008 annual impairment test, we incurred an aggregate impairment charge of $22.4 million. We determined that the fair value of a trade name in our Recovery Sciences Segment was less than its carrying amount, resulting in impairment of $10.1 million, and another trade name in our Surgical Implant Segment was abandoned, resulting in an impairment charge $12.3 million. These impairment charges were included in amortization and impairment of intangible assets within the consolidated statements of operations for the years ended December 31, 2009 and 2008.

 

Our definite-lived intangible assets are being amortized using the straight-line method over their remaining weighted average useful lives of ten years for technology-based assets, and nine years for customer-based assets. Based on our amortizable intangible asset balances as of December 31, 2010, we estimate that amortization expense will be as follows for the next five years and thereafter (in thousands):

 

Year Ending December 31,

 

 

 

2011

 

$

77,005

 

2012

 

75,685

 

2013

 

69,752

 

2014

 

68,142

 

2015

 

64,132

 

Thereafter

 

327,126

 

 

 

$

681,842

 

 

Our goodwill and intangible assets by segment are as follows (in thousands):

 

December 31, 2010

 

Goodwill

 

Intangible
Assets, Net

 

Bracing and Supports Segment

 

$

565,298

 

$

700,953

 

Recovery Sciences Segment

 

495,999

 

353,323

 

International Segment

 

80,184

 

36,453

 

Surgical Implant Segment

 

47,406

 

20,112

 

 

 

$

1,188,887

 

$

1,110,841

 

 

December 31, 2009

 

Goodwill

 

Intangible
Assets, Net

 

Bracing and Supports Segment

 

$

565,298

 

$

729,490

 

Recovery Sciences Segment

 

495,999

 

394,993

 

International Segment

 

82,794

 

40,173

 

Surgical Implant Segment

 

47,406

 

23,021

 

 

 

$

1,191,497

 

$

1,187,677

 

 

In the second quarter of 2010, we changed how we report our segment financial information to senior management. Prior to the second quarter of 2010, our Recovery Sciences and Bracing and Supports Segments were reported together as the Domestic Rehabilitation Segment. Segment information for all periods presented has been restated to reflect this change.