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Goodwill and Other Intangible Assets | 6 Months Ended | 12 Months Ended
--- | --- | ---
Jun. 30, 2011 | Dec. 31, 2010
Goodwill and Other Intangible Assets | ## Note 5 — Goodwill and Other Intangible Assets The changes in the carrying amount of goodwill by reportable segment during six months ended June 30, 2011 were as follows (in thousands):
|  | Cell Therapy — United States |  | Pharmaceutical Manufacturing — China |  | Total
Balance as of December 31, 2010 |  |  |  |  |  |  |  |  |  |  |  |
Goodwill |  | $ | 558.2 |  |  | $ | 27,002.0 |  |  | $ | 27,560.2 |
Accumulated impairment losses |  |  | (558.2 | ) |  |  | — |  |  |  | (558.2 | )
|  |  | — |  |  |  | 27,002.0 |  |  |  | 27,002.0 |
Acquisitions* |  |  | 9,680.0 |  |  |  | — |  |  |  | 9,680.0 |
Foreign currency exchange rate changes |  |  | — |  |  |  | 534.0 |  |  |  | 534.0 |
Balance as of June 30, 2011 |  |  |  |  |  |  |  |  |  |  |  |
Goodwill |  | $ | 9,680.0 |  |  | $ | 27,536.0 |  |  | $ | 37,216.0 |
| * | Goodwill associated with the PCT Merger
As of June 30, 2011 and December 31, 2010, the Company’s intangible assets and related accumulated amortization consisted of the following (in thousands):
|  | Useful Life |  | June 30, 2011 |  | December 31, 2010
|  | Gross |  | Accumulated Amortization |  | Net |  | Gross |  | Accumulated Amortization |  | Net
Customer list |  |  | 10 Years |  |  | $ | 19,490.8 |  |  | $ | (3,077.8 | ) |  | $ | 16,413.0 |  |  | $ | 17,740.0 |  |  | $ | (2,069.7 | ) |  | $ | 15,670.3 |
Manufacturing technology |  |  | 10 Years |  |  |  | 10,204.7 |  |  |  | (983.9 | ) |  |  | 9,220.8 |  |  |  | 4,220.6 |  |  |  | (492.4 | ) |  |  | 3,728.2 |
Tradename |  |  | 10 Years |  |  |  | 2,303.4 |  |  |  | (225.4 | ) |  |  | 2,078.0 |  |  |  | 983.9 |  |  |  | (114.7 | ) |  |  | 869.2 |
In process R&D |  |  | Indefinite |  |  |  | 1,762.8 |  |  |  | — |  |  |  | 1,762.8 |  |  |  | 2,219.6 |  |  |  | — |  |  |  | 2,219.6 |
Standard operating procedures |  |  | 10 Years |  |  |  | 1,087.9 |  |  |  | (181.3 | ) |  |  | 906.6 |  |  |  | 1,066.8 |  |  |  | (124.5 | ) |  |  | 942.3 |
Lease rights |  |  | 2 Years |  |  |  | 833.4 |  |  |  | (694.5 | ) |  |  | 138.9 |  |  |  | 817.2 |  |  |  | (476.7 | ) |  |  | 340.5 |
VSEL patent rights |  |  | 19 Years |  |  |  | 669.0 |  |  |  | (123.2 | ) |  |  | 545.8 |  |  |  | 669.0 |  |  |  | (105.6 | ) |  |  | 563.4 |
Patents |  |  | 8 Years |  |  |  | 167.7 |  |  |  | (41.9 | ) |  |  | 125.8 |  |  |  | 164.3 |  |  |  | (31.2 | ) |  |  | 133.1 |
Total Intangible Assets |  |  |  |  |  | $ | 36,519.7 |  |  | $ | (5,328.0 | ) |  | $ | 31,191.7 |  |  | $ | 27,881.4 |  |  | $ | (3,414.8 | ) |  | $ | 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 $500,600 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 June 30, |  | Six Months Ended June 30,
|  | 2011 |  | 2010 |  | 2011 |  | 2010
Cost of revenue |  | $ | 397.3 |  |  | $ | 226.7 |  |  | $ | 738.3 |  |  | $ | 328.3 |
Research and development |  |  | 13.8 |  |  |  | 13.6 |  |  |  | 27.5 |  |  |  | 27.1 |
Selling, general and administrative |  |  | 541.8 |  |  |  | 452.8 |  |  |  | 1,063.4 |  |  |  | 836.1 |
Total |  | $ | 952.9 |  |  | $ | 693.1 |  |  | $ | 1,829.2 |  |  | $ | 1,191.5 |
Estimated intangible amortization expense on an annual basis for the succeeding five years is as follows (in thousands):
2011 |  | $ | 1,820.9 |
2012 |  |  | 3,364.0 |
2013 |  |  | 3,364.0 |
2014 |  |  | 3,364.0 |
2015 |  |  | 3,364.0 |
Thereafter |  |  | 15,914.8 |
|  | $ | 31,191.7
| ## Note 5 — Goodwill and Other Intangible Assets As part of the Company’s annual impairment review as of December 31, 2010, a $558,200 goodwill impairment charge was recorded within the Company’s Cell Therapy — United States reportable segment due to lower than expected revenue and operating income growth of its Adult Stem Cell Banking — United States reporting unit since its acquisition. The Company estimated the fair value utilizing a discounted cash flow model. The changes in the carrying amount of goodwill, by reportable segment during 2010 and 2009 were as follows (in thousands):
|  | Cell Therapy — United States |  | Regenerative Medicine — China |  | Pharmaceutical Manufacturing — China
Balance as of December 31, 2008 |  |  |  |  |  |  |  |  |  |  |  |
Goodwill |  | $ | 558.2 |  |  | $ | — |  |  | $ | — |
Accumulated impairment losses |  |  | — |  |  |  | — |  |  |  | — |
|  |  | 558.2 |  |  |  | — |  |  |  | — |
Acquisitions |  |  | — |  |  |  | — |  |  |  | 26,070.4 |
Foreign currency exchange rate changes |  |  | — |  |  |  | — |  |  |  | 6.0 |
Balance as of December 31, 2009 |  |  |  |  |  |  |  |  |  |  |  |
Goodwill |  |  | 558.2 |  |  |  | — |  |  |  | 26,076.4 |
Accumulated impairment losses |  |  | — |  |  |  | — |  |  |  | — |
|  |  | 558.2 |  |  |  | — |  |  |  | 26,076.4 |
Impairment |  |  | (558.2 | ) |  |  | — |  |  |  | — |
Foreign currency exchange rate changes |  |  | — |  |  |  | — |  |  |  | 925.6 |
Balance as of December 31, 2010 |  |  |  |  |  |  |  |  |  |  |  |
Goodwill |  |  | 558.2 |  |  |  | — |  |  |  | 27,002.0 |
Accumulated impairment losses |  |  | (558.2 | ) |  |  | — |  |  |  | — |
|  | $ | — |  |  | $ | — |  |  | $ | 27,002.0 |
As of December 31, 2010 and 2009, the Company’s intangible assets and related accumulated amortization consisted of the following (in thousands):
|  | Useful Life |  | December 31,
|  | 2010 |  | 2009
|  | Gross |  | Accumulated Amortization |  | Net |  | Gross |  | Accumulated Amortization |  | Net
Amortized intangible assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Customer list |  |  | 10 |  |  | $ | 17,740.0 |  |  | $ | (2,069.7 | ) |  | $ | 15,670.3 |  |  | $ | 17,131.9 |  |  | $ | (285.5 | ) |  | $ | 16,846.4 |
Manufacturing technology |  |  | 10 |  |  |  | 4,220.6 |  |  |  | (492.4 | ) |  |  | 3,728.2 |  |  |  | 4,075.9 |  |  |  | (67.9 | ) |  |  | 4,008.0 |
In process R&D |  |  | Indefinite |  |  |  | 2,219.6 |  |  |  | — |  |  |  | 2,219.6 |  |  |  | 2,143.5 |  |  |  | — |  |  |  | 2,143.5 |
Standard operating procedures |  |  | 10 |  |  |  | 1,066.8 |  |  |  | (124.5 | ) |  |  | 942.3 |  |  |  | 1,030.2 |  |  |  | (17.1 | ) |  |  | 1,013.1 |
Tradename |  |  | 10 |  |  |  | 983.9 |  |  |  | (114.7 | ) |  |  | 869.2 |  |  |  | 950.2 |  |  |  | (15.8 | ) |  |  | 934.4 |
Lease rights |  |  | 2 |  |  |  | 817.2 |  |  |  | (476.7 | ) |  |  | 340.5 |  |  |  | 789.2 |  |  |  | (65.8 | ) |  |  | 723.4 |
VSEL patent rights |  |  | 19 |  |  |  | 669.0 |  |  |  | (105.6 | ) |  |  | 563.4 |  |  |  | 669.0 |  |  |  | (70.4 | ) |  |  | 598.6 |
Patents |  |  | 8 |  |  |  | 164.3 |  |  |  | (31.2 | ) |  |  | 133.1 |  |  |  | 158.7 |  |  |  | (11.1 | ) |  |  | 147.6 |
Intangible assets, net |  |  |  |  |  | $ | 27,881.4 |  |  | $ | (3,414.8 | ) |  | $ | 24,466.6 |  |  | $ | 26,948.6 |  |  | $ | (533.6 | ) |  | $ | 26,415.0 |
Total intangible amortization expense was classified in the operating expense categories for the periods included below as follows (in thousands):
|  | Years Ended December 31,
|  | 2010 |  | 2009 |  | 2008
Cost of revenues |  | $ | 912.5 |  |  | $ | 150.9 |  |  | $ | — |
Selling, general, and administrative |  |  | 1,842.0 |  |  |  | 312.5 |  |  |  | — |
Research and development |  |  | 35.2 |  |  |  | 35.2 |  |  |  | 35.2 |
Total |  | $ | 2,789.7 |  |  | $ | 498.6 |  |  | $ | 35.2 |
Estimated intangible amortization expense on an annual basis for the succeeding five years is as follows (in thousands):
Years Ending December 31, |  | Amount
2011 |  | $ | 2,796.6 |
2012 |  |  | 2,456.1 |
2013 |  |  | 2,456.1 |
2014 |  |  | 2,456.1 |
2015 |  |  | 2,456.1 |
Thereafter |  |  | 9,626.0 |
Total |  | $ | 22,247.0

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- 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. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -SubTopic 20 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6905597&loc=d3e13816-109267 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -SubTopic 30 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6905858&loc=d3e16265-109275 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 142 -Paragraph 42, 43, 44, 45, 46, 47 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -SubTopic 30 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6905858&loc=d3e16373-109275 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -SubTopic 30 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6905858&loc=d3e16323-109275 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -SubTopic 20 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6905597&loc=d3e13854-109267 + Details
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