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Goodwill and Other Intangible Assets
9 Months Ended
Sep. 30, 2011
Goodwill and Other Intangible Assets 
Goodwill and Other Intangible Assets

7. Goodwill and Other Intangible Assets

 

The changes in the carrying amount of goodwill by reportable segment for the year ended December 31, 2010, three-months ended March 31, 2011, June 30, 2011, and September 30, 2011 are as follows:

 

 

 

(in millions)

 

Crane

 

Foodservice

 

Total

 

Gross and net balance as of January 1, 2010

 

$

289.7

 

$

1,435.0

 

$

1,724.7

 

Acquisition of ASI

 

 

5.0

 

5.0

 

Deferred tax adjustment

 

 

5.8

 

5.8

 

Restructuring reserve adjustment

 

 

(2.7

)

(2.7

)

Foreign currency impact

 

(10.7

)

(0.1

)

(10.8

)

Gross balance as of December 31, 2010

 

$

279.0

 

$

1,443.0

 

$

1,722.0

 

Asset impairments

 

 

(548.8

)

(548.8

)

Net balance as of December 31, 2010

 

$

279.0

 

$

894.2

 

$

1,173.2

 

 

 

 

 

 

 

 

 

Restructuring reserve adjustment

 

$

 

$

(2.6

)

$

(2.6

)

Foreign currency impact

 

9.0

 

0.2

 

9.2

 

Gross balance as of March 31, 2011

 

$

288.0

 

$

1,440.6

 

$

1,728.6

 

Foreign currency impact

 

1.2

 

0.1

 

1.3

 

Gross balance as of June 30, 2011

 

$

289.2

 

$

1,440.7

 

$

1,729.9

 

Foreign currency impact

 

(8.4

)

(0.1

)

(8.5

)

Gross balance as of September 30, 2011

 

280.8

 

$

1,440.6

 

$

1,721.4

 

Asset impairments

 

 

(548.8

)

(548.8

)

Net balance as of September 30, 2011

 

$

280.8

 

$

891.8

 

$

1,172.6

 

 

The company accounts for goodwill and other intangible assets under the guidance of ASC Topic 350, “Intangibles — Goodwill and Other.”  Under ASC Topic 350, goodwill is no longer amortized; however, the company performs an annual impairment review at June 30 of every year or more frequently if events or changes in circumstances indicate that the asset might be impaired. The company performs impairment reviews for its reporting units, which are Cranes Americas; Cranes Europe, Middle East, and Africa; Cranes China; Cranes Greater Asia Pacific; Crane Care; Foodservice Americas; Foodservice Europe, Middle East, and Africa; and Foodservice Asia, using a fair-value method based on the present value of future cash flows, which involves management’s judgments and assumptions about the amounts of those cash flows and the discount rates used. The estimated fair value is then compared with the carrying amount of the reporting unit, including recorded goodwill.  Goodwill is then subject to risk of write-down to the extent that the carrying amount exceeds the estimated fair value.  Effective January 1, 2011, the Company revised its internal reporting structure and, as a result, the Cranes Asia reporting unit was split into Cranes China and Cranes Greater Asia Pacific reporting units.

 

As of June 30, 2011, the company performed its annual impairment analysis relative to goodwill and indefinite-lived intangible assets and based on those results no impairment was indicated.  The company will continue to monitor market conditions and determine if any additional interim reviews of goodwill, other intangibles or long-lived assets are warranted.  Further deterioration in the market or actual results as compared with the company’s projections may ultimately result in a future impairment.  In the event the company determines that assets are impaired in the future, the company would need to recognize a non-cash impairment charge, which could have a material adverse effect on the company’s Consolidated Balance Sheet and results of operations.

 

The gross carrying amount and accumulated amortization of the company’s intangible assets other than goodwill were as follows as of September 30, 2011 and December 31, 2010:

 

 

 

September 30, 2011

 

December 31, 2010

 

(in millions)

 

Gross
Carrying
Amount

 

Accumulated
Amortization

 

Net
Book
Value

 

Gross
Carrying
Amount

 

Accumulated
Amortization

 

Net
Book
Value

 

Trademarks and tradenames

 

$

319.2

 

$

 

$

319.2

 

$

317.0

 

$

 

$

317.0

 

Customer relationships

 

438.4

 

(68.4

)

370.0

 

439.2

 

(51.8

)

387.4

 

Patents

 

33.8

 

(23.2

)

10.6

 

33.3

 

(20.9

)

12.4

 

Engineering drawings

 

11.4

 

(7.4

)

4.0

 

11.2

 

(6.7

)

4.5

 

Distribution network

 

20.9

 

 

20.9

 

20.6

 

 

20.6

 

Other intangibles

 

184.5

 

(41.4

)

143.1

 

183.9

 

(32.3

)

151.6

 

Total

 

$

1,008.2

 

$

(140.4

)

$

867.8

 

$

1,005.2

 

$

(111.7

)

$

893.5

 

 

Amortization expense for the three months ended September 30, 2011 and 2010 was $9.9 million and $9.5 million, respectively. Amortization expense for the nine months ended September 30, 2011 and 2010 was $29.2 million and $28.7 million, respectively. Amortization expense related to intangible assets for each of the five succeeding years is estimated to be approximately $40 million per year.