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This excerpt taken from the ELN 20-F filed Feb 26, 2009. Goodwill,
Other Intangible Assets, Tangible Fixed Assets and
Impairment
Total goodwill and other intangible assets amounted to
$553.9 million at December 31, 2008 (2007:
$457.6 million). We account for goodwill and identifiable
intangible assets in accordance with the Financial Accounting
Standards Board’s (FASB) Statement No. 142,
“Goodwill and Other Intangible Assets,”
(SFAS 142). Pursuant to SFAS 142, goodwill and
identifiable intangible assets with indefinite useful lives are
not amortized, but instead are tested for impairment at least
annually. At December 31, 2008, we had no other intangible
assets with indefinite lives.
Intangible assets with estimable useful lives are amortized on a
straight-line basis over their respective estimated useful lives
to their estimated residual values and, as with other long-lived
assets such as tangible fixed assets, are reviewed for
impairment in accordance with SFAS No. 144,
“Accounting for the Impairment or Disposal of Long-Lived
Assets,” whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be
recoverable. If circumstances require a long-lived asset be
tested for possible impairment, we compare undiscounted cash
flows expected to be generated by an asset to the carrying value
of the asset. If the carrying value of the long-lived asset is
not recoverable on an undiscounted cash flow basis, an
impairment is recognized to the extent that the carrying value
exceeds its fair value. We determine fair value using the income
approach based on the present value of expected cash flows. Our
cash flow assumptions consider historical and forecasted revenue
and operating costs and other relevant factors. If we were to
use different estimates, particularly with respect to the
likelihood of R&D success, the likelihood and date of
commencement of generic competition or the impact of any
reorganization or change of business focus, then a material
impairment charge could arise. We believe that we have used
reasonable estimates in assessing the carrying values of our
intangible assets. The results of certain impairment tests on
intangible assets with estimable useful lives are discussed
below.
We review our goodwill for impairment at least annually or
whenever events or changes in circumstances indicate that the
carrying amount of these assets may not be recoverable. The
goodwill impairment test is a two-step test and is performed at
the reporting-unit level. A reporting unit is the same as, or
one level below, an operating segment as defined by
SFAS No. 131, “Disclosures about Segments of
an Enterprise and Related Information.” We have two
reporting units: Biopharmaceuticals and EDT, which are at the
operating-segment level. Under the first step, we compare the
fair value of each reporting unit with its carrying value,
including goodwill. If the fair value of the reporting unit
exceeds its carrying amount, goodwill of the reporting unit is
not considered impaired and step two does not need to be
performed. If the carrying amount of a reporting unit exceeds
its fair value, the second step of the goodwill impairment test
would be performed to measure the amount of impairment charge,
if any. The second step compares the implied fair value of the
reporting-unit goodwill with the carrying amount of that
goodwill, and any excess of the carrying amount over the implied
fair value is recognized as an impairment charge. The implied
fair value of goodwill is determined in the same manner as the
amount of goodwill recognized in a business combination is
determined, by allocating the fair value of a reporting unit to
individual assets and liabilities. The excess of the fair value
of a reporting unit over the amounts assigned to its assets and
liabilities is the
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implied fair value of goodwill. In evaluating goodwill for
impairment, we determine the fair values of the reporting units
using the income approach, based on the present value of
expected cash flows. We completed the annual goodwill impairment
test on September 30 of each year and the result of our tests
did not indicate any impairment in 2008, 2007 or 2006.
In performing our annual goodwill impairment test, we noted that
the combined fair value of our reporting units based on the
income approach exceeded our market capitalization at the test
date. In turn, given our shareholders’ deficit position,
both the fair value of our reporting units and our market
capitalization exceeded the combined carrying values of the
reporting units by a substantial margin, at the impairment test
date and as of December 31, 2008.
In June 2007, we recorded an impairment charge of
$52.2 million, within other net charges in the Consolidated
Income Statement, relating to the Maxipime and Azactam
intangible assets. As a direct result of the approval of a
first generic formulation of cefepime hydrochloride in June 2007
and the anticipated approval for a generic form of
Azactam, we revised the projected future cumulative
undiscounted cash flows. The revised projected cumulative
undiscounted cash flows were lower than the intangible
assets’ carrying value, thus indicating the intangible
assets were not recoverable. Consequently, the impairment charge
was calculated as the excess of the carrying value over the
discounted net present value. In conjunction with the impairment
charge, we revised the estimated useful lives of the intangibles
by nine months from September 2008 to December 2007.
Accordingly, the remaining net intangible assets’ carrying
value was amortized, on a straight-line basis, through
December 31, 2007. There were no material impairment
charges relating to intangible assets in either 2008 or 2006.
For additional information on goodwill and other intangible
assets, refer to Note 15 to the Consolidated Financial
Statements.
In January 2005, we launched Prialt in the United States.
Revenues from sales of Prialt totaled $16.5 million,
$12.3 million and $12.1 million in 2008, 2007 and
2006, respectively. These revenues were lower than our initial
forecast. Our estimates of the recoverable amount of this
product, based on future net cash flows, are in excess of the
asset’s carrying value of $51.6 million at
December 31, 2008. We believe that we have used reasonable
estimates in assessing the carrying value of this intangible.
Nevertheless, should our future revenues from this product fail
to meet our expectations, the carrying value of this asset may
become impaired.
We have invested significant resources in our manufacturing
facilities in Ireland to provide us with the capability to
manufacture products from our product development pipeline and
for our clients. To the extent that we are not successful in
developing these pipeline products or do not acquire products to
be manufactured at our facilities, the carrying value of these
facilities may become impaired. At December 31, 2008, our
best estimates of the likely success of development and
commercialization of our pipeline products support the carrying
value of our manufacturing facilities.
This excerpt taken from the ELN 20-F filed Feb 28, 2008. Goodwill,
Other Intangible Assets, Tangible Fixed Assets and
Impairment
Total goodwill and other intangible assets amounted to
$457.6 million at December 31, 2007 (2006:
$582.2 million). We account for goodwill and identifiable
intangible assets in accordance with the Financial Accounting
Standards Board’s (FASB) Statement No. 142,
“Goodwill and Other Intangible Assets,”
(SFAS 142). Pursuant to SFAS 142, goodwill and
identifiable intangible assets with indefinite useful lives are
no longer amortized, but instead are tested for impairment at
least annually. At December 31, 2007, we had no other
intangible assets with indefinite lives.
Intangible assets with estimable useful lives are amortized on a
straight-line basis over their respective estimated useful lives
to their estimated residual values and, as with other long-lived
assets such as tangible fixed assets, are reviewed for
impairment in accordance with SFAS No. 144,
“Accounting for the Impairment or Disposal of Long-Lived
Assets,” whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be
recoverable. If circumstances require a long-lived asset be
tested for possible impairment, we first compare undiscounted
cash flows expected to be generated by an asset to the carrying
value of the asset. If the carrying value of the long-lived
asset is not recoverable on an undiscounted cash flow basis, an
impairment is recognized to the extent that the carrying value
exceeds its fair value. We determine fair value using the income
approach based on estimated discounted cash flows. Our cash flow
assumptions consider historical and forecasted revenue and
operating costs and other relevant factors. If we were to use
different estimates, particularly with respect to the likelihood
of R&D success, the likelihood and date of commencement of
generic competition or the impact of any reorganization or
change of business focus, then a material impairment charge
could arise. We believe that we have used reasonable estimates
in assessing the carrying values of our intangible assets. The
results of certain impairment tests on intangible assets with
estimable useful lives are discussed below.
We review our goodwill for impairment at least annually or
whenever events or changes in circumstances indicate that the
carrying amount of these assets may not be recoverable. The
goodwill impairment test is a two-step test and is performed at
the reporting unit level. A reporting unit is the same as, or
one level below, an operating segment as defined by
SFAS No. 131, “Disclosures about Segments of an
Enterprise and Related Information.” We have two reporting
units: Biopharmaceuticals and EDT. Under the first step, we
compare the fair value of each reporting unit with its carrying
value, including goodwill. If the fair value of the reporting
unit exceeds its carrying amount, goodwill of the reporting unit
is not considered impaired and step two does not need to be
performed. If the carrying amount of a reporting unit exceeds
its fair value, the second step of the goodwill impairment test
would be performed to measure the amount of impairment charge,
if any. The second step compares the implied fair value of the
reporting unit goodwill with the carrying amount of that
goodwill, and any excess of the carrying amount over the implied
fair value is recognized as an impairment charge. The implied
fair value of goodwill is determined in the same manner as the
amount of goodwill recognized in a business combination is
determined, by allocating the fair value of a reporting unit to
individual assets and liabilities. The excess of the fair value
of a reporting unit over the amounts assigned to its assets and
liabilities is the implied fair value of goodwill. In evaluating
goodwill for impairment, we determine the fair values of the
reporting units using the income approach, based on estimated
discounted future cash flows. The results of our goodwill
impairment tests did not indicate any impairment in 2007, 2006
or 2005.
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In June 2007, we recorded an impairment charge of
$52.2 million, within other net charges in the Consolidated
Income Statement, relating to the Maxipime and Azactam
intangible assets. As a direct result of the approval of a
first generic formulation of cefepime hydrochloride in June 2007
and the anticipated approval for a generic form of
Azactam, we revised the projected future cumulative
undiscounted cash flows. The revised projected cumulative
undiscounted cash flows were lower than the intangible
assets’ carrying value, thus indicating the intangible
assets were not recoverable. Consequently, the impairment charge
was calculated as the excess of the carrying value over the
discounted net present value. In conjunction with the impairment
charge, we revised the estimated useful lives of the intangibles
by nine months from September 2008 to December 2007.
Accordingly, the remaining net intangible assets’ carrying
value was amortized, on a straight-line basis, through
December 31, 2007. There were no material impairment
charges relating to intangible assets in either 2006 or 2005.
For additional information on goodwill and other intangible
assets, refer to Note 15 to the Consolidated Financial
Statements.
In January 2005, we launched Prialt in the United States.
Revenues from sales of Prialt totaled $12.3 million,
$12.1 million and $6.3 million in 2007, 2006 and 2005,
respectively. These revenues were lower than our initial
forecast. Our estimates of the recoverable amount of this
product, based on future net cash flows, are in excess of the
asset’s carrying value of $58.1 million at
December 31, 2007. We believe that we have used reasonable
estimates in assessing the carrying value of this intangible.
Nevertheless, should our future revenues from this product fail
to meet our expectations, the carrying value of this asset may
become impaired.
We have invested significant resources in our manufacturing
facilities in Ireland to provide us with the capability to
manufacture products from our product development pipeline. To
the extent that we are not successful in developing these
pipeline products or do not acquire products to be manufactured
at our facilities, the carrying value of these facilities may
become impaired. At December 31, 2007, our best estimates
of the likely success of development and commercialization of
our pipeline products support the carrying value of our
manufacturing facilities.
This excerpt taken from the ELN 20-F filed Feb 28, 2007. Goodwill,
Other Intangible Assets, Tangible Fixed Assets and
Impairment
We account for goodwill and identifiable intangible assets in
accordance with the Financial Accounting Standards Board’s
(FASB) Statement No. 142, “Goodwill and Other
Intangible Assets,” (SFAS 142). Pursuant to
SFAS 142, goodwill and identifiable intangible assets with
indefinite useful lives are no longer amortized, but instead are
tested for impairment at least annually. Intangible assets with
estimable useful lives are amortized on a straight-line basis
over their respective estimated useful lives to their estimated
residual values and reviewed for impairment in accordance with
SFAS No. 144, “Accounting for the Impairment or
Disposal of Long-Lived Assets.”
We review our goodwill for impairment at least annually or
whenever events or changes in circumstances indicate that the
carrying amount of these assets may not be recoverable. At
December 31, 2006, we had no other intangible assets with
indefinite lives.
The goodwill impairment test is performed at the reporting unit
level. A reporting unit is the same as, or one level below, an
operating segment as defined by SFAS No. 131,
“Disclosures About Segments of an Enterprise and Related
Information.” We have two reporting units:
Biopharmaceuticals and EDT. We compare the fair value of each
reporting unit with its carrying value, including goodwill. If
the fair value of the reporting unit exceeds its carrying
amount, goodwill of the reporting unit is not considered
impaired. If the carrying amount of a reporting unit exceeds its
fair value, the second step of the goodwill impairment test
would be performed to measure the amount of impairment charge,
if any. The second step compares the implied fair value of the
reporting unit goodwill with the carrying amount of that
goodwill, and any excess of the carrying amount over the implied
fair value is recognized as an impairment charge. The implied
fair value of goodwill is determined in the same manner as the
amount of goodwill recognized in a business combination is
determined, by allocating the fair value of a reporting unit to
individual assets and liabilities. The excess of the fair value
of a reporting unit over the amounts assigned to its assets and
liabilities is the implied fair value of goodwill. The results
of our goodwill impairment tests did not indicate any impairment
in 2006.
There were no material impairment charges relating to intangible
assets in either 2006, 2005 or 2004. For additional information
on goodwill and other intangible assets, please refer to
Note 15 to the Consolidated Financial Statements.
Total goodwill and other intangible assets amounted to
$575.9 million at December 31, 2006 (2005:
$665.5 million). If we were to use different estimates,
particularly with respect to the likelihood of R&D success,
the likelihood and date of commencement of generic competition
or the impact of any reorganization or change of business focus,
then a material impairment charge could arise. We believe that
we have used reasonable estimates in assessing the carrying
values of our intangible assets.
In January 2005, we launched Prialt in the United States.
Revenues from sales of Prialt totaled $12.1 million
and $6.3 million in 2006 and 2005, respectively. These
revenues were lower than our initial forecast. Our estimates of
the fair value of this product, based on future net cash flows,
are well in excess of the asset’s carrying value of
$64.5 million at December 31, 2006. We believe that we
have used reasonable estimates in assessing the carrying value
of this intangible. Nevertheless, should our future revenues
from this product fail to meet our expectations, the carrying
value of this asset may become impaired.
We have invested significant resources in our manufacturing
facilities in Ireland to provide us with the capability to
manufacture products from our product development pipeline. To
the extent that we are not successful
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in developing these pipeline products or do not acquire products
to be manufactured at our facilities, the carrying value of
these facilities may become impaired. At December 31, 2006,
our best estimates of the likely success of development and
commercialization of our pipeline products support the carrying
value of our manufacturing facilities.
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