Goodwill and Other Intangible Assets, Net

3 Months Ended

Mar. 30, 2014

Goodwill and other intangible assets, net

Note 6 — Goodwill and other intangible assets, net

In the first quarter of 2014, the Company changed its reporting structure to six reportable segments: Vascular North America, Anesthesia/Respiratory North America, Surgical North America, EMEA, Asia and OEM. See Note 14 for additional information on the Company’s new reporting structure.

The following table provides information relating to changes in the carrying amount of goodwill by reportable segment for the three months ended March 30, 2014:

	Vascular North America			Anesthesia/ Respiratory North America			Surgical North America		EMEA		Asia		All Other			Total
	(Dollars in thousands)
Balance as of December 31, 2013
Goodwill	$	474,044		$	167,195		$	250,506	$	373,417	$	136,946	$	284,223		$	1,686,331
Accumulated impairment losses		(219,527	)		(107,073	)		—		—		—		(5,528	)		(332,128	)
		254,517			60,122			250,506		373,417		136,946		278,695			1,354,203
Goodwill related to acquisitions		—			—			—		—		15,986		—			15,986
Translation adjustment		—			(402	)		—		1,615		1,099		(443	)		1,869

Balance as of March 30, 2014
Goodwill		474,044			166,793			250,506		375,032		154,031		283,780			1,704,186
Accumulated impairment losses		(219,527	)		(107,073	)		—		—		—		(5,528	)		(332,128	)
	$	254,517		$	59,720		$	250,506	$	375,032	$	154,031	$	278,252		$	1,372,058

The following table provides information as of March 30, 2014 and December 31, 2013 regarding the gross carrying amount of, and accumulated amortization relating to, intangible assets, net:

	Gross Carrying Amount				Accumulated Amortization
	March 30, 2014		December 31, 2013		March 30, 2014			December 31, 2013
	(Dollars in thousands)
Customer relationships	$	638,476	$	628,020	$	(176,053	)	$	(168,223	)
In-process research and development		68,786		68,786		—			—
Intellectual property		436,189		435,869		(125,872	)		(118,086	)
Distribution rights		16,863		16,797		(14,743	)		(14,592	)
Trade names		408,375		407,879		(1,713	)		(1,148	)
Noncompete agreements		337		337		(112	)		(42	)
	$	1,569,026	$	1,557,688	$	(318,493	)	$	(302,091	)

During the first quarter 2013, the Company recorded an IPR&D charge of $4.5 million. See Note 4 for additional information.

In May 2012, the Company acquired Semprus, a biomedical research and development company that developed a polymer surface treatment technology intended to reduce thrombus related complications. The Company experienced unexpected difficulties with respect to the development of the Semprus technology, which the Company is currently attempting to resolve through further research and testing. Failure to resolve these issues may result in a reduction of the expected future cash flows related to the Semprus technology and could result in the recognition of impairment charges with respect to the related assets, which could be material. As of March 30, 2014, the Company has recorded net assets of approximately $38 million related to this investment.

Amortization expense related to intangible assets was $16.0 million and $12.4 million for the three months ended March 30, 2014 and March 31, 2013, respectively. Estimated annual amortization expense for the remainder of 2014 and the next five succeeding years is as follows (dollars in thousands):

2014	$	49,100
2015		55,500
2016		54,500
2017		54,000
2018		53,500
2019		51,000

- 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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