Goodwill And Intangible Assets

9 Months Ended

Sep. 30, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in a business combination. Intangible assets resulting from the acquisitions of entities accounted for using the acquisition method of accounting are recorded at the estimated fair value of the assets acquired. Identifiable intangible assets are comprised of purchased customer relationships, trademarks and trade names, developed technologies and other intangible assets. The fair values of these identified intangible assets are based upon expected future cash flows or income, which take into consideration certain assumptions such as customer turnover, trade names and patent lives. These determinations are primarily based upon the Company’s historical experience and expected benefit of each intangible asset. If it is determined that such assumptions are not accurate, then the resulting change will impact the fair value of the intangible asset. Identifiable intangible assets are amortized over the period of estimated economic benefit, which ranges from one to 20 years.

The changes in carrying amounts of goodwill for the nine months ended September 30, 2017 are as follows (in thousands):



	Business Cloud Services			Digital Media			Consolidated
Balance as of January 1, 2017	$	559,152		$	563,658		$	1,122,810
Goodwill acquired (Note 3)	31,253			—			31,253
Goodwill reclassified to noncurrent assets held for sale ⁽¹⁾	—			(36,312		)	(36,312		)
Goodwill written off related to sale of a business unit ⁽²⁾⁽³⁾	(3,614		)	(17,815		)	(21,429		)
Purchase accounting adjustments ⁽⁴⁾	(766		)	(1,464		)	(2,230		)
Foreign exchange translation	13,811			85			13,896
Balance as of September 30, 2017	$	599,836		$	508,152		$	1,107,988

⁽¹⁾During the third quarter 2017, the Company reclassified $36.3 million of goodwill to noncurrent assets held for sale in connection with Tea Leaves (see Note 5 - Assets Held for Sale).

⁽²⁾On July 12, 2017, in a cash transaction, the Company sold Cambridge which resulted in $17.8 million of goodwill being written off in connection with this sale (see Note 5 - Assets Held for Sale).

⁽³⁾ On September 1, 2017, in a cash transaction, the Company sold Web24 which resulted in $3.6 million of goodwill being written off in connection with this sale (see Note 5 - Assets Held for Sale).

⁽⁴⁾Purchase accounting adjustments relate to adjustments to goodwill in connection with prior year business acquisitions (see Note 3 - Business Acquisitions).

Intangible Assets with Indefinite Lives:

Intangible assets are summarized as of September 30, 2017 and December 31, 2016 as follows (in thousands):



	September 30, 2017		December 31, 2016
Trade name	$	27,379	$	27,379
Other	5,432		5,432
Total	$	32,811	$	32,811

Intangible Assets Subject to Amortization:

As of September 30, 2017, intangible assets subject to amortization relate primarily to the following (in thousands):



	Weighted-Average Amortization Period	Historical Cost		Accumulated Amortization		Net
Trade names	11.5 years	$	127,525	$	48,191	$	79,334
Patent and patent licenses	6.6 years	66,829		55,597		11,232
Customer relationships ⁽¹⁾	9.4 years	414,996		236,186		178,810
Other purchased intangibles	5.2 years	196,157		56,411		139,746
Total		$	805,507	$	396,385	$	409,122

⁽¹⁾ Historically, the Company has amortized its customer relationship assets in a pattern that best reflects the pace in which the asset’s benefits are consumed. This pattern results in a substantial majority of the amortization expense being recognized in the first 4 to 5 years, despite the overall life of the asset.

As of December 31, 2016, intangible assets subject to amortization relate primarily to the following (in thousands):



	Weighted-Average Amortization Period	Historical Cost		Accumulated Amortization		Net
Trade names	11.5 years	$	127,342	$	38,868	$	88,474
Patent and patent licenses	6.6 years	65,605		51,677		13,928
Customer relationships ⁽¹⁾	9.6 years	390,930		182,775		208,155
Other purchased intangibles	6.0 years	195,913		27,590		168,323
Total		$	779,790	$	300,910	$	478,880

Amortization expense, included in general and administrative expense, approximated $31.7 million and $23.7 million for the three month period ended September 30, 2017 and 2016, respectively, and $94.3 million and $69.6 million for the nine month period ended September 30, 2017 and 2016, respectively. Amortization expense is estimated to approximate $174.8 million, $97.4 million, $53.3 million, $36.9 million and $29.7 million for fiscal years 2017 through 2021, respectively, and $111.3 million thereafter through the duration of the amortization period.

- 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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