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Goodwill, Intangible Assets and In-Process Revenue Contracts | 12 Months Ended
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Dec. 31, 2012
Goodwill, Intangible Assets and In-Process Revenue Contracts |
6. | Goodwill, Intangible Assets and In-Process Revenue Contracts
Goodwill The carrying amount of goodwill for the years ended December 31, 2012 and 2011, for the Company’s reportable segments are as follows:
|  | Shuttle Tanker and FSO Segment $ |  |  | Liquefied Gas Segment $ |  |  | Conventional Tanker Segment $ |  |  | Total $ |
Balance as of December 31, 2010 |  |  | 130,908 |  |  |  | 35,631 |  |  |  | 36,652 |  |  |  | 203,191 |
Goodwill impairment |  |  | — |  |  |  | — |  |  |  | (36,652 | ) |  |  | (36,652 | )
Balance as of December 31, 2011 and 2012 |  |  | 130,908 |  |  |  | 35,631 |  |  |  | — |  |  |  | 166,539 |
A goodwill impairment charge of $36.7 million was recognized in the Company’s consolidated statements of loss for the year ended December 31, 2011 in respect of its Suezmax tanker reporting unit. The fair value of this reporting unit was determined using the present value of expected future cash flows discounted at a rate equivalent to a market participant’s weighted-average cost of capital. The estimates and assumptions regarding expected future cash flows and the appropriate discount rates are in part based upon existing contracts, future tanker market rates, historical experience, financial forecasts and industry trends and conditions. The recognition of the goodwill impairment charge was driven by the continuing weak tanker market, which has largely been caused by an oversupply of vessels relative to demand. Intangible Assets As at December 31, 2012, the Company’s intangible assets consisted of:
|  | Weighted-Average Amortization Period (Years) |  |  | Gross Carrying Amount $ |  |  | Accumulated Amortization $ |  |  | Net Carrying Amount $ |
Customer contracts |  |  | 13.7 |  |  |  | 316,684 |  |  |  | (191,587 | ) |  |  | 125,097 |
Other intangible assets |  |  | 0.9 |  |  |  | 1,280 |  |  |  | (241 | ) |  |  | 1,039 |
|  |  | 13.6 |  |  |  | 317,964 |  |  |  | (191,828 | ) |  |  | 126,136 |
As at December 31, 2011 the Company’s intangible assets consisted of:
|  | Weighted-Average Amortization Period (Years) |  |  | Gross Carrying Amount $ |  |  | Accumulated Amortization $ |  |  | Net Carrying Amount $ |
Customer contracts |  |  | 15.6 |  |  |  | 329,815 |  |  |  | (194,266 | ) |  |  | 135,549 |
Other intangible assets |  |  | 4.5 |  |  |  | 11,430 |  |  |  | (10,237 | ) |  |  | 1,193 |
|  |  | 15.2 |  |  |  | 341,245 |  |  |  | (204,503 | ) |  |  | 136,742 |
Aggregate amortization expense of intangible assets for the year ended December 31, 2012, was $17.2 million (2011—$19.1 million, 2010—$26.2 million), which is included in depreciation and amortization. Amortization of intangible assets for the five years following 2012 is expected to be $18.4 million (2013), $13.0 million (2014), $11.9 million (2015), $10.9 million (2016), $9.9 million (2017) and $62.0 million (thereafter). During the year ended December 31, 2012, unfavorable customer contracts with a carrying value of $5.9 million were reclassified from intangible assets to in-process revenue contracts. During 2010, the Company recognized $31.7 million in write-downs of three vessel purchase options and certain in-charter customer contracts. The vessel purchase options and in-charter contracts either expired unexercised or were unlikely to be exercised by the Company. In-Process Revenue Contracts As part of the Company’s acquisition of FPSO units from Sevan and its previous acquisitions of Petrojarl ASA (subsequently renamed Teekay Petrojarl AS, or Teekay Petrojarl) and 50% of OMI Corporation (or OMI), the Company assumed certain FPSO contracts and time charter-out contracts with terms that were less favorable than the then prevailing market terms. At the time of the acquisitions, the Company recognized a liability based on the estimated fair value of these contracts. The Company is amortizing this liability over the estimated remaining terms of the contracts on a weighted basis based on the projected revenue to be earned under the contracts. Amortization of in-process revenue contracts for the year ended December 31, 2012 was $72.9 million (2011—$46.4 million, 2010—$48.3 million), which is included in revenues on the consolidated statements of loss. Amortization for the five years following 2012 is expected to be $61.7 million (2013), $40.2 million (2014), $19.8 million (2015), $19.8 million (2016), $19.8 million (2017) and $80.3 million (thereafter).

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- Definition Goodwill, intangible assets and in-process revenue contracts. + References No definition available. + Details
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