Goodwill and Other Intangible Assets (Notes)

12 Months Ended

Dec. 31, 2011

Goodwill and Intangible Assets Disclosure [Abstract]

Changes in the carrying amount of goodwill, by business segment, are as follows (in thousands):



	LTC			SCG		Total
Goodwill balance as of January 1, 2010, as reported	$	3,474,233		$	678,022	$	4,152,255
Adjustment to revise acquisition reserves (Note 2)	(51,893		)	—		(51,893		)
Goodwill balance as of January 1, 2010, as revised	$	3,422,340		$	678,022	$	4,100,362
Goodwill acquired in the year ended December 31, 2010	80,596			—		80,596
Other	1,404			566		1,970
Goodwill balance as of December 31, 2010	3,504,340			678,588		4,182,928
Goodwill acquired in the year ended December 31, 2011	52,924			—		52,924
Other	11,394			40		11,434
Goodwill balance as of December 31, 2011	$	3,568,658		$	678,628	$	4,247,286

The “Other” caption above includes the settlement of acquisition matters relating to prior-year acquisitions (including, where applicable, payments pursuant to acquisition agreements such as deferred payments, indemnification payments and payments originating from earnout provisions for acquisitions prior to January 1, 2009, as well as adjustments for the finalization of purchase price allocations, including identifiable intangible asset valuations). “Other” also includes the effect of adjustments due to foreign currency translations, which relate primarily to the Company's pharmacy located in Canada, which is included in LTC.

The Company performed its annual goodwill impairment analysis for the year ended December 31, 2011 in accordance with the new authoritative guidance on goodwill impairment. This analysis included an assessment of qualitative factors to determine whether it is more likely than not that the fair value of the reporting units is less than their carrying amounts. The impairment analysis involves an assessment of certain qualitative factors including, but not limited to, macroeconomic, industry and market conditions; cost factors that have a negative effect on earnings; overall financial performance; the movement of the Company's share price; and other relevant entity and reporting unit specific events. This assessment includes the determination of the likely effect of each factor on the fair value of each reporting unit. Although the Company believes the factors considered in the impairment analysis are reasonable, significant changes in any of the assumptions could produce a significantly different result. Based on the Company's annual goodwill impairment analysis for the years ended December 31, 2011 and 2010, except for the impairment charges disclosed in the "Discontinued Operations" note of the Notes to Consolidated Financial Statements, Omnicare concluded that goodwill had not been impaired.

During the fourth quarter of 2011, the Company changed its operating segments, which resulted in two reportable segments, LTC and SCG. In connection with this change in operating segments, the Company reallocated goodwill to its reporting units based on a relative fair value approach.

During 2011, the Company identified necessary revisions to amounts recognized for purchase accounting reserves. See additional information at the "Revisions to Financial Statements" note for additional information.

The table below presents the Company’s other identifiable intangible assets, all of which are subject to amortization, except trademark and trade names as described below (in thousands):



				December 31, 2011
	Original Amortization Life (in years)			Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Customer relationship assets	8.5	—	15	$	408,329	$	(221,477	)	$	186,852
Trademark and trade names		—	(a)	28,122		(837		)	27,285
Non-compete agreements	5	—	15	42,010		(20,063		)	21,947
Technology assets	10	—	11	5,976		(3,575		)	2,401
Other	10	—	15	326		(248		)	78
Total				$	484,763	$	(246,200	)	$	238,563
				December 31, 2010
				Gross Carrying Amount		Accumulated Amortization and Impairment Losses			Net Carrying Amount
Customer relationship assets				$	392,281	$	(186,467	)	$	205,814
Trademark and trade names				39,672		(13,300		)	26,372
Non-compete agreements				48,036		(24,545		)	23,491
Technology assets				11,899		(7,859		)	4,040
Other				328		(236		)	92
Total				$	492,216	$	(232,407	)	$	259,809

(a)Certain of Omnicare's trademark and trade names are amortized over their useful lives ranging up to five years.

The remainder have indefinite useful lives as further discussed below.

Amortization expense related to identifiable intangible assets was $41.6 million, $38.9 million and $39.2 million for the years ended December 31, 2011, 2010 and 2009, respectively. Omnicare’s trademark and trade names primarily constitute identifiable intangible assets with indefinite useful lives based upon their expected useful lives and the anticipated effects of obsolescence, demand, competition and other factors per the requirements of the authoritative guidance regarding goodwill and other intangible assets. Accordingly, these trademarks and trade names are not amortized, but are reviewed annually for impairment. The Company performed its annual assessment for the year ended December 31, 2011 and concluded that these assets had not been impaired. In its annual assessment for the year ended December 31, 2010, the Company concluded that certain trade names of the business were impaired and, accordingly, recorded an impairment loss of approximately $13.3 million in the fourth quarter of 2010, due to revisions in forecasted cash flows associated with those trade name intangible assets. The fair value at December 31, 2011 and 2010 was determined using projected revenue and cash flows developed by the Company (Level 3 inputs).

The Company also recorded other asset impairment charges of approximately $10 million in the three months and year ended December 31, 2010, primarily to write-off certain technology assets that were abandoned, and related non–compete agreement assets. The fair value at December 31, 2010 was determined using projected revenue and cash flows developed by the Company (Level 3 inputs).

Estimated annual amortization expense for intangible assets subject to amortization at December 31, 2011 for the next five fiscal years is as follows (in thousands):



Year ended	Amortization
December 31,	Expense
2012	$	41,301
2013	35,966
2014	34,760
2015	31,913
2016	22,397

- 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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