6. Intangibles Assets and Goodwill

Intangible Assets

Intangible assets are stated at cost or acquisition-date fair value less accumulated amortization and consists of the following:


	September 30, 2019
	Gross Carrying				Intangible
	Amount (a)		Amortization		Asset, net
Customer relationships	$	507,901	$	(226,123)	$	281,778
Developed technology		89,053		(86,966)		2,087
Trade names (b)		8,400		(3,100)		5,300
Outsource contract costs		60,514		(36,303)		24,212
Internally developed software		41,971		(9,956)		32,015
Trademarks		23,378		(23,370)		8
Non compete agreements		1,350		(1,350)		—
Assembled workforce		4,473		(839)		3,634
Purchased software		26,749		(1,337)		25,412
Intangibles, net	$	763,789	$	(389,344)	$	374,445


	December 31, 2018
	Gross Carrying				Intangible
	Amount (a)		Amortization		Asset, net
Customer relationships	$	507,905	$	(190,666)	$	317,239
Developed technology		89,053		(85,967)		3,086
Trade names (c)		9,400		(3,100)		6,300
Outsource contract costs		46,342		(27,719)		18,623
Internally developed software		36,820		(6,278)		30,542
Trademarks		23,379		(23,370)		9
Non compete agreements		1,350		(1,350)		—
Assembled workforce		4,473		—		4,473
Purchased software		26,749		—		26,749
Intangibles, net	$	745,471	$	(338,450)	$	407,021

(a)

Amounts include intangible assets acquired in business combinations and asset acquisitions.

(b)

The carrying amount of trade names for September 30, 2019 is net of accumulated impairment losses of $44.1 million, of which $1.0 million was recognized in the nine months ended September 30, 2019.

(c)

The carrying amount of trade names for 2018 is net of accumulated impairment losses of $43.1 million, of which $3.7 million was recognized in 2018.

Goodwill and other indefinite-lived assets are tested for impairment annually or more frequently if events or changes in circumstances indicate that the asset might be impaired. We conduct our annual goodwill and indefinite-lived assets impairment tests on October 1st of each year, or more frequently if indicators of impairment exist. The Company utilizes the Income Approach, specifically the Relief-from-Royalty method, to determine the fair value of the indefinite-lived assets. The Company uses a combination of the Guideline Public Company Method of the Market Approach and the Discounted Cash Flow Method of the Income Approach to determine the reporting unit fair value for goodwill impairment.

During the three months ended September 30, 2019, the Company made an evaluation based on factors such as changes in the Company’s growth rate and recent trends in the Company’s market capitalization, and concluded that a triggering event for an interim impairment analysis had occurred in the third quarter of 2019. As part of the assessment, it was determined that the increase in the discount rate applied in the valuation was required to reflect current market dynamics and company-specific risk. This higher discount rate, in conjunction with revised long-term projections, resulted in lower than previously projected long-term future cash flows for the reporting units which reduced the estimated fair value to below carrying value. As a result of the interim impairment assessment, the Company recorded an impairment charge to goodwill and trade names of $98.7 million, including taxes, and $1.0 million, respectively. The impairment charges are included within Impairment of goodwill and other intangible assets in the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2019.

Goodwill

The Company’s operating segments are significant strategic business units that align its products and services with how it manages its business, approach the markets and interacts with its clients. The Company is organized into three segments: ITPS, HS, and LLPS (See Note 15).

Goodwill by reporting segment consists of the following:


										Currency
										Translation
	Goodwill			Additions			Reductions			Adjustments		Goodwill (a)
ITPS	$	566,215	$	5,580	(c)	$	—		$	(220)	$	571,575
HS		86,786		—			—			—		86,786
LLPS		94,324		—			(44,427)	(b)		—		49,897
Balance as of December 31, 2018	$	747,325	$	5,580		$	(44,427)		$	(220)	$	708,258
ITPS		571,575		—			(90,361)	(d)		(118)		481,096
HS		86,786		—			—			—		86,786
LLPS		49,897		—			(8,321)	(e)		—		41,576
Balance as of September 30, 2019	$	708,258	$	—		$	(98,682)		$	(118)	$	609,458

(a)

The goodwill amount for all periods presented is net of accumulated impairment losses of $167.9 million.

(b)

The reduction in goodwill is due to $44.4 million, including taxes, for impairment recorded in the fourth quarter of 2018.

(c)

Addition to goodwill due to the acquisition of Asterion and immaterial acquisitions in the third and fourth quarters of 2018.

(d)

The reduction in goodwill is due to $90.4 million, including taxes, for impairment recorded in the third quarter of 2019.

(e)

The reduction in goodwill is due to $8.3 million, including taxes, for impairment recorded in the third quarter of 2019.