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, 2012

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 2012 and fiscal 2011 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, 2012 and 2011, follow.

												Marking and
	Cemetery			Funeral Home					Graphics			Fulfillment		Merchandising
	Products			Products		Cremation			Imaging			Systems		Solutions		Consolidated

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

Additions during period		10,424			57		770			2,896			1,151		-		15,298
Translation and other adjustments		(783	)		-		53			(3,462	)		72		-		(4,120	)
Goodwill		97,783			162,876		17,558			167,262			30,816		9,138		485,433
Accumulated impairment losses		(412	)		-		(5,000	)		(3,840	)		-		-		(9,252	)
Balance at September 30, 2012	$	97,371		$	162,876	$	12,558		$	163,422		$	30,816	$	9,138	$	476,181

In 2012, the addition to Cemetery Products reflects the acquisition of Everlasting in May 2012. The additions to Funeral Home Products and Marking and Fulfillment Systems goodwill primarily represents the effect of adjustments to purchase price; the addition to Cremation goodwill reflects the acquisition of a small cremation equipment manufacturer in Europe; and the addition to Graphics Imaging goodwill related primarily to additional consideration paid in accordance with the purchase agreement with Tact Group Limited and effect of adjustments to purchase price for Kroma.

In 2011, the addition to Funeral Home Products 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 and Fullfillment Systems goodwill represents the acquisitions of IPTI and LPT.

The following tables summarize the carrying amounts and related accumulated amortization for intangible assets as of September 30, 2012 and 2011, respectively.

	Carrying		Accumulated
	Amount		Amortization			Net
September 30, 2012:
Trade names	$	24,488	$	-	*	$	24,488
Trade names		2,182		(1,571	)		611
Customer relationships		47,654		(15,689	)		31,965
Copyrights/patents/other		9,920		(7,969	)		1,951
	$	84,244	$	(25,229	)	$	59,015

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
*Not subject to amortization

The net change in intangible assets during fiscal 2012 included the impact of changes in foreign currency exchange rates and additional 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.

Amortization expense on intangible assets was $3,886, $4,200, and $3,720 in fiscal 2012, 2011 and 2010, respectively. Fiscal year amortization expense is estimated to be $3,521 in 2013, $3,316 in 2014, $3,058 in 2015, $2,768 in 2016 and $2,557 in 2017.

- 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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