Goodwill and Other Intangible Assets

9 Months Ended

Sep. 30, 2011

Note 5 – Goodwill and Other Intangible Assets

The changes in the carrying amount of goodwill by reportable segment during nine months ended September 30, 2011 were as follows (in thousands):

			Pharmaceutical
	Cell Therapy -		Manufacturing -
	United States		China		Total
Balance as of December 31, 2010	$	-	$	27,002.0	$	27,002.0
Acquisitions*		4,783.6		-		4,783.6
Foreign currency exchange rate changes		-		801.1		801.1
Balance as of September 30, 2011	$	4,783.6	$	27,803.1	$	32,586.7
*Goodwill associated with the PCT Merger

As of September 30, 2011 and December 31, 2010, the Company’s intangible assets and related accumulated amortization consisted of the following (in thousands):

		September 30, 2011							December 31, 2010
				Accumulated							Accumulated
	Useful Life	Gross		Amortization			Net		Gross		Amortization			Net
Customer list	10 Years	$	19,666.3	$	(3,598.6	)	$	16,067.7	$	17,740.0	$	(2,069.7	)	$	15,670.3
Manufacturing technology	10 Years		10,251.3		(1,247.4	)		9,003.9		4,220.6		(492.4	)		3,728.2
Tradename	10 Years		2,313.0		(284.8	)		2,028.2		983.9		(114.8	)		869.1
In process R&D	Indefinite		1,779.9		-			1,779.9		2,219.6		-			2,219.6
Standard operating procedures	10 Years		1,098.4		(210.5	)		887.9		1,066.8		(124.5	)		942.3
Lease rights	2 Years		841.4		(806.4	)		35.0		817.2		(476.7	)		340.5
VSEL patent rights	19 Years		669.0		(132.0	)		537.0		669.0		(105.6	)		563.4
Patents	8 Years		203.1		(81.2	)		121.9		164.4		(31.2	)		133.2
Total Intangible Assets		$	36,822.4	$	(6,360.9	)	$	30,461.5	$	27,881.5	$	(3,414.9	)	$	24,466.6

In 2011, Erye commenced sales of two products that were previously accounted for as In Process R&D which has resulted in a reclassification of approximately $505,500 from In Process R&D to Manufacturing Technology. Certain of the Company’s intangible assets are recorded on the books of wholly owned or partially owned subsidiaries and affiliates in China, and denominated in RMB. As a result, the balance reported fluctuates based upon the changes in exchange rates.

In connection with the acquisition of PCT, the following intangible assets were acquired (in thousands):

Customer list	$	1,400.0
Manufacturing technology		5,400.0
Tradename		1,300.0
	$	8,100.0

Total intangible amortization expense was classified in the operating expense categories for the periods included below as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2011		2010		2011		2010
Cost of revenue	$	388.1	$	87.1	$	1,126.4	$	259.8
Research and development		13.8		401.3		41.4		1,185.6
Selling, general and administrative		547.9		-		1,611.4		8.8
Total	$	949.8	$	488.4	$	2,779.2	$	1,454.2

Estimated intangible amortization expense on an annual basis for the succeeding five years is as follows (in thousands):

2011	$	880.1
2012		3,380.0
2013		3,380.0
2014		3,380.0
2015		3,380.0
Thereafter		16,061.4
	$	30,461.5

- 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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