Matthews International Corporation Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

GOODWILL AND OTHER INTANGIBLE ASSETS

GOODWILL AND OTHER INTANGIBLE ASSETS

12 Months Ended

Sep. 30, 2011

GOODWILL AND OTHER INTANGIBLE ASSETS [Abstract]

18.	GOODWILL AND OTHER INTANGIBLE ASSETS:

Goodwill is not amortized but is subject to annual review for impairment. In general, when the carrying value of a reporting unit exceeds its implied fair value, an impairment loss must be recognized. For purposes of testing for impairment the Company uses a combination of valuation techniques, including discounted cash flows. Intangible assets are amortized over their estimated useful lives unless such lives are considered to be indefinite. A significant decline in cash flows generated from these assets may result in a write-down of the carrying values of the related assets.

The Company performed its annual impairment reviews in the second quarters of fiscal 2011 and fiscal 2010 and determined that no adjustments to the carrying values of goodwill or other indefinite lived intangibles were necessary. Changes to goodwill, net of accumulated amortization, during the years ended September 30, 2011 and 2010, follow.

									Graphics			Marking		Merchandising
	Bronze			Casket		Cremation			Imaging			Products		Solutions		Consolidated

Goodwill	$	79,707		$	122,896	$	13,887		$	158,863		$	9,980	$	9,138	$	394,471
Accumulated impairment losses		(412	)		-		(5,000	)		(3,840	)		-		-		(9,252	)
Balance at September 30, 2009		79,295			122,896		8,887			155,023			9,980		9,138		385,219

Additions during period		10,554			17,657		2,968			(1,403	)		129		-		29,905
Translation and other adjustments		(1,648	)		-		(56	)		(8,299	)		59		-		(9,944	)
Goodwill		88,613			140,553		16,799			149,161			10,168		9,138		414,432
Accumulated impairment losses		(412	)		-		(5,000	)		(3,840	)		-		-		(9,252	)
Balance at September 30, 2010		88,201			140,553		11,799			145,321			10,168		9,138		405,180

Additions during period		-			22,266		-			22,521			19,227		-		64,014
Translation and other adjustments		(471	)		-		(64	)		(3,854	)		198		-		(4,191	)
Goodwill		88,142			162,819		16,735			167,828			29,593		9,138		474,255
Accumulated impairment losses		(412	)		-		(5,000	)		(3,840	)		-		-		(9,252	)
Balance at September 30, 2011	$	87,730		$	162,819	$	11,735		$	163,988		$	29,593	$	9,138	$	465,003

In 2011, the addition to Casket goodwill represents the acquisition of Freeman; the addition to Graphics Imaging goodwill represents the acquisition of Kroma and the remaining 25% interest in Reproflex; and the addition to Marking Products goodwill represents the acquisitions of IPTI and LPT.

In 2010, the addition to Bronze goodwill represents the acquisition of UMP; the addition to Casket goodwill primarily represents the acquisitions of Newmark, A.J. Distribution and Reynoldsville; the addition to Cremation goodwill represents the acquisition of FCC; and the change in Graphics Imaging goodwill represents the effect of an adjustment to the purchase price for Saueressig.

The following tables summarize the carrying amounts and related accumulated amortization for intangible assets as of September 30, 2011 and 2010, respectively.

	Carrying		Accumulated
	Amount		Amortization			Net
September 30, 2011:
Trade names	$	24,266	$	-	*	$	24,266
Trade names		2,227		(1,147	)		1,080
Customer relationships		47,876		(13,228	)		34,648
Copyrights/patents/other		9,870		(7,039	)		2,831
	$	84,239	$	(21,414	)	$	62,825

September 30, 2010:
Trade names	$	24,314	$	-	*	$	24,314
Trade names		1,689		(780	)		909
Customer relationships		40,607		(10,674	)		29,933
Copyrights/patents/other		8,984		(6,198	)		2,786
	$	75,594	$	(17,652	)	$	57,942
*Not subject to amortization

The net change in intangible assets during fiscal 2011 included an increase for the acquisitions of Freeman, Kroma and LPT offset by the impact of changes in foreign currency exchange rates and additional amortization. The change in intangible assets during fiscal 2010 included an increase for the acquisitions of UMP, A.J. Distribution, Reynoldsville, and Newmark offset by the impact of changes in foreign currency exchange rates and additional amortization.

Amortization expense on intangible assets was $4,200, $3,720, and $4,310 in fiscal 2011, 2010 and 2009, respectively. Fiscal year amortization expense is estimated to be $3,904 in 2012, $3,544 in 2013, $3,320 in 2014, $3,087 in 2015 and $2,778 in 2016.

- 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 + Details