Goodwill and Acquired Intangible Assets

12 Months Ended

Sep. 30, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

In 2017, we had three operating and reportable segments: (1) Solutions Group, (2) IoT Group and (3) Professional Services. Effective with the beginning of the first quarter of 2018, we changed our operating and reportable segments from three to two: (1) Software Products and (2) Professional Services. We assess goodwill for impairment at the reporting unit level. Our reporting units are determined based on the components of our operating segments that constitute a business for which discrete financial information is available and for which operating results are regularly reviewed by segment management. Our reporting units are the same as our operating segments.

As of September 30, 2019, goodwill and acquired intangible assets in the aggregate attributable to our Software Products and Professional Services segment was $1,362.4 million and $45.7 million, respectively. As of September 30, 2018, goodwill and acquired intangible assets in the aggregate attributable to our Software Products and Professional Services segment was $1,352.4 million and $30.2 million, respectively.

Goodwill is tested for impairment annually, or on an interim basis if an event occurs or circumstances change that would, more likely than not, reduce the fair value of the reporting segment below its carrying value. We completed our annual goodwill impairment review as of June 30, 2019 and concluded that no impairment charge was required as of that date. We completed our annual goodwill impairment review as of June 29, 2019 based on a qualitative assessment. Our qualitative assessment included company specific (financial performance and long-range plans), industry, and macroeconomic factors, and consideration of the fair value of each reporting unit relative to its carrying value at July 2, 2016, the last valuation date. Based on our qualitative assessment, we believe it is more likely than not that the fair values of our reporting units exceed their carrying values and no further impairment testing is required. Through September 30, 2019, there have not been any triggering events or changes in circumstances that indicate that the carrying values of goodwill or acquired intangible assets may not be recoverable.

Goodwill and acquired intangible assets consisted of the following:



(in thousands)	September 30, 2019						September 30, 2018
	Gross Carrying Amount		Accumulated Amortization		Net Book Value		Gross Carrying Amount		Accumulated Amortization		Net Book Value
Goodwill (not amortized)					$	1,238,179					$	1,182,457
Intangible assets with finite lives (amortized) (1):
Purchased software	$	377,359	$	278,144	$	99,215	$	362,679	$	254,059	$	108,620
Capitalized software	22,877		22,877		—		22,877		22,877		—
Customer lists and relationships	355,931		288,828		67,103		357,586		270,272		87,314
Trademarks and trade names	18,891		15,260		3,631		19,054		14,786		4,268
Other	3,910		3,910		—		4,003		4,003		—
	$	778,968	$	609,019	$	169,949	$	766,199	$	565,997	$	200,202
Total goodwill and acquired intangible assets					$	1,408,128					$	1,382,659

(1) The weighted-average useful lives of purchased software, customer lists and relationships, and trademarks and trade names with a remaining net book value are 9 years, 10 years, and 11 years, respectively.

The changes in the carrying amounts of goodwill from October 1, 2018 to September 30, 2019 are due to the impact of acquisitions and to foreign currency translation adjustments related to those asset balances that are recorded in non-U.S. currencies.

Changes in goodwill presented by reportable segment were as follows:



(in thousands)	Software Products			Professional Services			Total
Balance, September 30, 2017	$	1,152,917		$	29,855		$	1,182,772
Acquisition	4,350			—			4,350
Foreign currency translation adjustments	(4,547		)	(118		)	(4,665		)
Balance, September 30, 2018	$	1,152,720		$	29,737		$	1,182,457
Frustum acquisition	53,673			—			53,673
Other acquisitions	—			12,645			12,645
Foreign currency translation adjustments	(10,329		)	(267		)	(10,596		)
Balance, September 30, 2019	$	1,196,064		$	42,115		$	1,238,179

The aggregate amortization expense for intangible assets with finite lives recorded for the years ended September 30, 2019, 2018 and 2017 was reflected in our Consolidated Statements of Operations as follows:



(in thousands)	Year ended September 30,
	2019		2018		2017
Amortization of acquired intangible assets	$	23,841	$	31,350	$	32,108
Cost of software revenue	27,307		26,706		26,621
Total amortization expense	$	51,148	$	58,056	$	58,729

The estimated aggregate future amortization expense for intangible assets with finite lives remaining as of September 30, 2019 is $49.0 million for 2020, $43.8 million for 2021, $30.8 million for 2022, $19.0 million for 2023, $8.4 million for 2024 and $18.9 million thereafter.