MOLX » Topics » Goodwill and Intangible Assets

This excerpt taken from the MOLX 10-K filed Aug 3, 2006.

Goodwill and Intangible Assets


Goodwill is recorded when the purchase price paid for an acquisition exceeds the estimated fair value of the net identified tangible and intangible assets acquired.


We perform an annual goodwill impairment analysis as of May 31st, or earlier if indicators of potential impairment exist.  In assessing the recoverability of goodwill, we review both quantitative as well as qualitative factors to support our assumptions with regard to fair value.  Our impairment review process compares the fair value of the reporting unit in which goodwill resides to our carrying value.  Reporting units may be operating segments as a whole or an operation one level below an operating segment, referred to as a component.  Components are defined as operations for which discrete financial information is available and reviewed by segment management.

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The fair value of a reporting unit is estimated using a discounted cash flow model for the evaluation of impairment.  The expected future cash flows are based on management’s estimates and are determined by looking at numerous factors including projected economic conditions and customer demand, revenue and margins, changes in competition, operating costs and new products introduced.  In determining fair value, we make certain judgments.  If these estimates or their related assumptions change in the future as a result of changes in strategy and/or market conditions, we may be required to record an impairment charge.


Although management believes its assumptions in determining the projected cash flows are reasonable, changes in those estimates could affect the evaluation.


This excerpt taken from the MOLX 10-K filed Sep 12, 2005.

Goodwill and Intangible Assets

Goodwill is recorded when the purchase price paid for an acquisition exceeds the estimated fair value of the net identified tangible and intangible assets acquired.

The Company performs an annual goodwill impairment analysis as of May 31st, or earlier if indicators of potential impairment exist. In assessing the recoverability of goodwill, the Company reviews both quantitative as well as qualitative factors to support its assumptions with regard to fair value. Molex’s impairment review process compares the fair value of the reporting unit in which goodwill resides to its carrying value. Reporting units may be operating segments as a whole or an operation one level below an operating segment, referred to as a component. Components are defined as operations for which discrete financial information is available and reviewed by segment management.

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The fair value of a reporting unit is estimated using a discounted cash flow model for the evaluation of impairment. The expected future cash flows are based on management’s estimates and are determined by looking at numerous factors including projected economic conditions and customer demand, revenue and margins, changes in competition, operating costs and new products introduced. In determining fair value, the Company makes certain judgments. If these estimates or their related assumptions change in the future as a result of changes in strategy and/or market conditions, the Company may be required to record an impairment charge.

Although management believes its assumptions in determining the projected cash flows are reasonable, changes in those estimates could affect the evaluation.

EXCERPTS ON THIS PAGE:

10-K
Aug 3, 2006
10-K
Sep 12, 2005
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