Acquisitions, Divestitures, Intangible Assets and Goodwill

6 Months Ended

Jun. 30, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

Acquisitions, Divestitures, Intangible Assets and Goodwill

Acquisitions

In June 2015, we acquired 100% of the outstanding shares of Borderfree, Inc. ("Borderfree"). The results of operations of Borderfree are included in our consolidated results from the date of acquisition. During the second quarter of 2016, as a result of obtaining new information about facts and circumstances that existed as of the acquisition date, we recorded an increase of $2 million to accounts payable and accrued expenses acquired in the Borderfree acquisition and a corresponding increase to goodwill. Our consolidated operating results for the three and six months ended June 30, 2016 include revenue of $29 million and $54 million, respectively from Borderfree operations. On a supplemental pro forma basis, had we acquired Borderfree on January 1, 2015, our revenues would have been $22 million and $47 million higher, respectively for the three and six months ended June 30, 2015. The impact on our earnings would not have been material.

On January 12, 2016, we acquired Enroute for $14 million in cash plus potential additional payments during the periods 2017-2019 based on the achievement of revenue targets during the periods 2016-2018. Enroute is a software-as-a-service enterprise retail and fulfillment solutions company and is reported within our Global Ecommerce segment.

On July 1, 2016, we acquired Maponics for $24 million. Maponics provides comprehensive boundary information and geospatial data that support location-based services and analytics and will be reported within our Software Solutions segment.

Divestitures

On May 29, 2015, we sold Imagitas, for net proceeds of $292 million and recognized a pre-tax gain of $111 million which was reported within other (income) expense, net in the Condensed Consolidated Statements of Income.

Intangible Assets

Intangible assets consisted of the following:



	June 30, 2016							December 31, 2015
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Customer relationships	$	442,466	$	(289,881	)	$	152,585	$	437,459	$	(272,353	)	$	165,106
Software & technology	149,636		(136,860		)	12,776		149,591		(135,198		)	14,393
Trademarks & other	35,727		(28,303		)	7,424		35,314		(27,435		)	7,879
Total intangible assets	$	627,829	$	(455,044	)	$	172,785	$	622,364	$	(434,986	)	$	187,378

Amortization expense was $11 million and $8 million for the three months ended June 30, 2016 and 2015, respectively and $21 million and $16 million, for the six months ended June 30, 2016 and 2015, respectively.

Future amortization expense for intangible assets as of June 30, 2016 was as follows:



Remaining for year ending December 31, 2016	$	17,732
Year ending December 31, 2017	28,135
Year ending December 31, 2018	25,595
Year ending December 31, 2019	22,463
Year ending December 31, 2020	17,720
Thereafter	61,140
Total	$	172,785

Actual amortization expense may differ from the amounts above due to, among other things, fluctuations in foreign currency exchange rates, impairments, acquisitions and accelerated amortization.

Goodwill

The changes in the carrying value of goodwill for the six months ended June 30, 2016 were as follows:



	December 31, 2015		Acquisitions		Foreign currency translation			June 30, 2016
North America Mailing	$	296,053	$	—	$	2,753		$	298,806
International Mailing	148,351		—		3,419			151,770
Small & Medium Business Solutions	444,404		—		6,172			450,576
Production Mail	105,757		—		(1,291		)	104,466
Presort Services	196,890		—		—			196,890
Enterprise Business Solutions	302,647		—		(1,291		)	301,356
Software Solutions	674,976		—		(7,545		)	667,431
Global Ecommerce	323,930		9,421		—			333,351
Digital Commerce Solutions	998,906		9,421		(7,545		)	1,000,782
Total goodwill	$	1,745,957	$	9,421	$	(2,664	)	$	1,752,714

- 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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