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GOODWILL AND OTHER INTANGIBLE ASSETS
9 Months Ended
Oct. 01, 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 segment, were as follows:

 

 

 

December 31,
2010

 

Goodwill
resulting from
business
combinations

 

Impairments

 

Foreign
Currency
Translation
and other (1)

 

October 1,
2011

 

Flow Technology

 

 

 

 

 

 

 

 

 

 

 

Gross goodwill

 

$

702.7

 

$

3.2

 

$

 

$

3.6

 

$

709.5

 

Accumulated impairments

 

 

 

 

 

 

Goodwill

 

702.7

 

3.2

 

 

3.6

 

709.5

 

 

 

 

 

 

 

 

 

 

 

 

 

Test & Measurement

 

 

 

 

 

 

 

 

 

 

 

Gross goodwill

 

434.5

 

16.9

 

 

3.3

 

454.7

 

Accumulated impairments

 

(257.0

)

 

 

(1.7

)

(258.7

)

Goodwill

 

177.5

 

16.9

 

 

1.6

 

196.0

 

 

 

 

 

 

 

 

 

 

 

 

 

Thermal Equipment and Services

 

 

 

 

 

 

 

 

 

 

 

Gross goodwill

 

602.6

 

 

 

4.0

 

606.6

 

Accumulated impairments

 

(114.1

)

 

(17.2

)

 

(131.3

)

Goodwill

 

488.5

 

 

(17.2

)

4.0

 

475.3

 

 

 

 

 

 

 

 

 

 

 

 

 

Industrial Products and Services

 

 

 

 

 

 

 

 

 

 

 

Gross goodwill

 

351.8

 

 

 

(0.9

)

350.9

 

Accumulated impairments

 

(85.9

)

 

 

 

(85.9

)

Goodwill

 

265.9

 

 

 

(0.9

)

265.0

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

Gross goodwill

 

2,091.6

 

20.1

 

 

10.0

 

2,121.7

 

Accumulated impairments

 

(457.0

)

 

(17.2

)

(1.7

)

(475.9

)

Goodwill

 

$

1,634.6

 

$

20.1

 

$

(17.2

)

$

8.3

 

$

1,645.8

 

 

 

(1)                                 Includes adjustments resulting from recent acquisitions not consummated during the nine months ended October 1, 2011 of ($4.8) and foreign currency translation adjustments totaling $13.1.

 

Other Intangibles

 

Identifiable intangible assets comprised the following:

 

 

 

October 1, 2011

 

December 31, 2010

 

 

 

Gross
Carrying
Value

 

Accumulated
Amortization

 

Net Carrying
Value

 

Gross
Carrying
Value

 

Accumulated
Amortization

 

Net
Carrying
Value

 

Intangible assets with determinable lives:

 

 

 

 

 

 

 

 

 

 

 

 

 

Patents

 

$

19.3

 

$

(17.3

)

$

2.0

 

$

24.6

 

$

(21.6

)

$

3.0

 

Technology

 

118.0

 

(29.8

)

88.2

 

116.7

 

(23.3

)

93.4

 

Customer relationships

 

261.8

 

(64.4

)

197.4

 

239.7

 

(51.6

)

188.1

 

Other

 

38.5

 

(18.0

)

20.5

 

35.4

 

(13.5

)

21.9

 

 

 

437.6

 

(129.5

)

308.1

 

416.4

 

(110.0

)

306.4

 

Trademarks with indefinite lives (1)

 

407.5

 

 

407.5

 

413.1

 

 

413.1

 

Total

 

$

845.1

 

$

(129.5

)

$

715.6

 

$

829.5

 

$

(110.0

)

$

719.5

 

 

 

(1)           Balance at October 1, 2011 reflects impairment charges recorded during the second quarter of 2011 associated with businesses within our Thermal Equipment and Services and Industrial Products and Services segments of $7.5 and $0.8, respectively.

 

Estimated annual amortization expense related to these intangible assets is $32.6 in 2011, $28.5 in 2012, $26.5 in 2013, $25.8 in 2014 and $23.9 in 2015.

 

At October 1, 2011, the net carrying value of intangible assets with determinable lives consisted of $161.4 in the Flow Technology segment, $75.9 in the Test and Measurement segment, $59.5 in the Thermal Equipment and Services segment, and $11.3 in the Industrial Products and Services segment. Trademarks with indefinite lives consisted of $208.3 in the Flow Technology segment, $54.3 in the Test and Measurement segment, $130.7 in the Thermal Equipment and Services segment, and $14.2 in the Industrial Products and Services segment.

 

We annually test the recoverability of our goodwill and indefinite-lived intangible assets during the fourth quarter based on a measurement date as of the end of the third quarter. In addition, we test such assets for impairment on a more frequent basis if there are indications of potential impairment. Based on our annual impairment testing during the fourth quarter of 2010, our SPX Heat Transfer Inc. reporting unit had an estimated fair value that was comparable to the carrying value of its net assets. In the second quarter of 2011, SPX Heat Transfer Inc. experienced an additional decline in its revenues and profitability, furthering a trend that began late in the first quarter of 2011, in comparison to (i) recent historical results and (ii) expected results for the period, due to the challenging conditions within the U.S. power market. Although we expect financial results for the reporting unit to rebound, the projections of future discounted cash flows as of the end of the second quarter of 2011 indicated that the reporting unit’s fair value was less than the carrying value of its net assets. Accordingly, we recorded an impairment charge of $24.7 during the second quarter of 2011 associated with SPX Heat Transfer Inc.’s goodwill ($17.2) and indefinite-lived intangible assets ($7.5). After the $24.7 impairment charge, SPX Heat Transfer Inc. had goodwill and indefinite-lived intangible assets of $3.6 and $22.6, respectively.