Goodwill And Intangible Assets

9 Months Ended

Sep. 30, 2019

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, 2019 are as follows (in thousands):



	Fax and Martech			Voice, Backup, Security and CPP			Total Cloud Services			Digital Media			Consolidated
Balance as of January 1, 2019	$	366,270		$	300,718		$	666,988		$	713,388		$	1,380,376
Goodwill acquired (Note 4)	31,655			179,944			211,599			43,208			254,807
Purchase accounting adjustments ⁽¹⁾	177			—			177			(1,089		)	(912		)
Foreign exchange translation	(2,178		)	(5,557		)	(7,735		)	(270		)	(8,005		)
Balance as of September 30, 2019	$	395,924		$	475,105		$	871,029		$	755,237		$	1,626,266

⁽¹⁾Purchase accounting adjustments relate to measurement period adjustments to goodwill in connection with prior business acquisitions (see Note 4 - Business Acquisitions).

Intangible Assets with Indefinite Lives:

Intangible assets are summarized as of September 30, 2019 and December 31, 2018 as follows (in thousands):



	September 30, 2019		December 31, 2018
Trade names	$	27,379	$	27,379
Other	4,306		4,306
Total	$	31,685	$	31,685

Intangible Assets Subject to Amortization:

As of September 30, 2019, intangible assets subject to amortization relate primarily to the following (in thousands):



	Weighted-Average Amortization Period	Historical Cost		Accumulated Amortization		Net
Trade names	10.3 years	$	192,396	$	77,842	$	114,554
Patent and patent licenses	6.5 years	67,903		62,513		5,390
Customer relationships ⁽¹⁾	8.5 years	623,966		366,706		257,260
Other purchased intangibles	4.5 years	386,144		190,127		196,017
Total		$	1,270,409	$	697,188	$	573,221

⁽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.

During the nine months ended September 30, 2019, the Company completed acquisitions which were individually immaterial. The identified intangible assets recognized as part of these acquisition and their respective estimated weighted average amortizations were as follows (in thousands):



	Weighted-Average Amortization Period	Fair Value
Trade names	8.1 years	$	10,450
Customer relationships	7.2 years	121,803
Trademark	6.2 years	32,540
Other purchased intangibles	3.7 years	47,537
Total		$	212,330

As of December 31, 2018, intangible assets subject to amortization relate primarily to the following (in thousands):



	Weighted-Average Amortization Period	Historical Cost		Accumulated Amortization		Net
Trade names	10.9 years	$	181,231	$	65,722	$	115,509
Patent and patent licenses	6.5 years	67,887		60,541		7,346
Customer relationships ⁽¹⁾	9.1 years	507,330		316,122		191,208
Other purchased intangibles	4.4 years	307,554		126,834		180,720
Total		$	1,064,002	$	569,219	$	494,783

Amortization expense, included in general and administrative expense, approximated $50.4 million and $35.8 million for the three months ended September 30, 2019 and 2018, respectively, and $132.2 million and $102.7 million for the nine months ended September 30, 2019 and 2018, respectively. Amortization expense is estimated to approximate $47.9 million, $145.4 million, $107.8 million, $85.9 million and $51.9 million for the remaining three months of fiscal year 2019 through fiscal year 2023, respectively, and $134.3 million thereafter through the duration of the amortization period.