Goodwill and Other Intangible Assets

6 Months Ended

Jun. 30, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

Note 6: Goodwill and Other Intangible Assets

Goodwill

The carrying amount of goodwill was as follow:



Dollars in thousands	June 30, 2016		December 31, 2015
Goodwill	$	473,417	$	473,417

During the second quarter of 2015, we recognized a goodwill impairment charge of $85.9 million related to ecoATM. The goodwill was originally recognized as part of our acquisition of ecoATM in 2013. During the three months ended June 30, 2015, it became evident that revenue and profitability trends in our ecoATM reporting unit were not being achieved as expected. As a result, we revised our internal expectations for future revenue growth and profitability lower than our previous estimates.

The expected future cash flows of our ecoATM reporting unit include key assumptions with inherent uncertainty which may change in future periods and may have a negative effect on the fair value resulting in potential future impairments, the most significant of which is our estimate of future cash flows predicated on estimated growth in kiosks, revenue and profitability measures. Additionally, fair value may be negatively impacted by changes in our strategy related to the ecoATM reporting unit and factors outside of our control such as increased competition from companies whose primary business consists of the purchase of used electronics and with companies in other businesses who also have buyback programs.

To evaluate whether it is more likely than not that the fair value of each of our reporting units are less than their respective carrying amounts as of June 30, 2016, we considered all relevant events and circumstances including, but not limited to, the performance of our reporting units compared to the estimates used in our most recent quantitative analysis, changes in our average market capitalization, and the excess of fair value for each of our reporting units over the carrying amounts of each of our reporting units as indicated by the first step of the goodwill impairment test completed in the fourth quarter of 2015. There have not been any events or changes in circumstances that we believe would more likely than not reduce the fair value of any of our reporting units below their carrying amounts.

On March 14, 2016, we announced that our Board of Directors has initiated a process to explore strategic and financial alternatives to maximize shareholder value. As a result of the exploration of strategic and financial alternatives, on July 24, 2016, the company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with affiliates of certain funds (the “Apollo Funds”) managed by affiliates of Apollo Global Management, LLC (together with its consolidated subsidiaries, “Apollo”), a leading global alternative investment manager, pursuant to which the Apollo Funds will acquire all of the outstanding shares of Outerwall common stock for $52.00 per share in cash. The transaction will be completed through an all-cash tender offer. See Note 17: Subsequent Events for additional information. Through this process we did not obtain any additional information regarding the fair value of our reporting units that would indicate the fair value of any of our reporting units were individually below their carrying amounts.

Other Intangible Assets

The gross amount of our other intangible assets and the related accumulated amortization were as follows:



Dollars in thousands	Amortization Period	June 30, 2016			December 31, 2015
Retailer relationships	5 - 10 years	$	53,295		$	53,295
Accumulated amortization		(29,217		)	(27,212		)
Retailer relationships, net		24,078			26,083
Developed technology	3 - 5 years	36,000			36,000
Accumulated amortization		(20,277		)	(16,544		)
Developed technology, net		15,723			19,456
Trade names	5 - 10 years	20,000			20,000
Accumulated amortization		(4,433		)	(3,133		)
Trade names, net		15,567			16,867
Other	1 - 40 years	10,800			10,800
Accumulated amortization		(6,651		)	(6,109		)
Other, net		4,149			4,691
Total intangible assets, net		$	59,517		$	67,097

Amortization expense was as follows:



	Three Months Ended				Six Months Ended
	June 30,				June 30,
Dollars in thousands	2016		2015		2016		2015
Retailer relationships	$	1,002	$	1,003	$	2,005	$	2,006
Developed technology	1,867		1,700		3,733		3,400
Trade names	650		300		1,300		600
Other	271		306		542		656
Total amortization of intangible assets	3,790		3,309		7,580		6,662
Less: amortization included in discontinued operations	—		—		—		(44		)
Total amortization of intangible assets from continuing operations	$	3,790	$	3,309	$	7,580	$	6,618

Assuming no future impairment, the expected future amortization as of June 30, 2016, is as follows:



Dollars in thousands	Total
Remainder of 2016	$	7,580
2017	15,160
2018	11,598
2019	6,213
2020	5,819
Thereafter	13,147
Total expected amortization	$	59,517

- 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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