Invacare 2006 Annual Report Download - page 76

Other Intangibles
All of the company’s other intangible assets have definite lives and continue to be amortized over their useful
lives, except for $33,034,000 related to trademarks, which have indefinite lives. The company’s intangibles consist
of the following (in thousands):
Historical
Cost
Accumulated
Amortization
Historical
Cost
Accumulated
Amortization
December 31, 2006 December 31, 2005
Customer Lists........................ $ 71,106 $14,373 $ 64,218 $ 8,270
Trademarks .......................... 33,034 — 30,246 —
License agreements .................... 8,149 6,384 7,564 5,821
Developed Technology .................. 6,819 940 6,260 487
Patents.............................. 6,631 3,869 12,414 2,690
Other ............................... 8,005 4,205 7,876 3,193
$133,744 $29,771 $128,578 $20,461
Intangibles recorded as the result of acquisitions during 2006 were as follows (in thousands):
Fair Value
Weighted Average
Amortization Period
Customer relationships................................... $1,941 6 years
Non-Compete Agreements ................................ 134 3years
Total ................................................ $2,075
Amortization expense related to other intangibles was $9,311,000 and $9,307,000 for 2006 and 2005,
respectively. Estimated amortization expense for each of the next five years is expected to be $8,622,000 for
2007, $8,186,000 in 2008, $7,944,000 in 2009, $7,559,000 in 2010 and $7,283,000 in 2011.
In accordance with SFAS No. 142, the company reviews intangibles for impairment. For purposes of the
impairment test, the fair value of each unamortized intangible is estimated by forecasting cash flows and
discounting those cash flows using appropriate discount rates. For amortized intangibles, the forecasted un-
discounted cash flows were compared to the carrying value, and if impairment results, the impairment is measured
based on the estimated fair value of the intangibles. The fair values are then compared to the carrying value of the
intangible. As a result of the company’s 2006 intangible impairment review, an impairment charge of $160,000 was
recorded associated with a trade name and a charge of $5,601,000 was recorded related to the intangible recorded
associated with NeuroControl. See Investment in Affiliated Company in the Notes to the Consolidated Financial
Statements included in this report below. The company has recorded a material amount of intangibles as the result of
acquisitions which may become impaired if performance assumptions, primarily related to sales and operating cash
flows estimates, made at the time of originally valuing the intangibles are not achieved.
Investment in Affiliated Company
FASB Interpretation No. 46, Consolidation of Variable Interest Entities (FIN 46), which was revised in
December 2003 and, requires consolidation of an entity if the company is subject to a majority of the risk of loss
from the variable interest entity’s (VIE) activities or entitled to receive a majority of the entity’s residual returns, or
both. A company that consolidates a VIE is known as the primary beneficiary of that entity.
FS-17
INVACARE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)