Goodwill and Intangible Assets

6 Months Ended

Jun. 30, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

Note 5. Goodwill and Intangible Assets

Intangible Assets

The following table presents the Company’s purchased intangible assets as of June 30, 2016 (in thousands):

Gross Intangibles

Accumulated
Amortization

Net Intangibles

Weighted Average
Amortization
Period (years)

Intangible assets subject to amortization:

Customer relationships

167,628

(66,842)

100,786

Trade names and trademarks

14,100

(6,235)

7,865

Non-compete agreements

2,997

(1,347)

1,650

Content library

500

(250)

250

Proprietary software

1,550

(885)

665

Favorable lease agreement

449

(449)

Intangible assets not subject to amortization:

Domain names

52,700

N/A

239,924

(76,008)

163,916

The following table presents the Company’s purchased intangible assets as of December 31, 2015 (in thousands):


	Gross Intangibles		Accumulated Amortization		Net Intangibles		Weighted Average Amortization Period (years)
Intangible assets subject to amortization:
Customer relationships	$	102,594	$	(58,294)	$	44,300		8
Trade names and trademarks		11,698		(5,470)		6,228		8
Content library		491		(123)		368		2
Non-compete agreements		1,190		(1,190)		-		2
Proprietary software		850		(850)		-		2
Favorable lease agreement		449		(449)		-		2

	$	117,272	$	(66,376)	$	50,896		8

The Company’s estimated future amortization expense for the succeeding years relating to the purchased intangible assets resulting from acquisitions completed prior to June 30, 2016, is as follows (in thousands):


Years Ending December 31,	Amount

2016 (remaining six months)	$	10,433
2017		20,755
2018		14,495
2019		13,443
2020		10,783
2021		6,397
2022 and thereafter		34,910

Goodwill

Changes in goodwill for the six months ended June 30, 2016 consist of the following (in thousands):


	January 1, 2016		Acquisition ⁽¹⁾		Effect of Foreign Currency		June 30, 2016
Americas	$	186,049	$	70,223	$	1,848	$	258,120
EMEA		9,684		-		345		10,029

	$	195,733	$	70,223	$	2,193	$	268,149

Changes in goodwill for the year ended December 31, 2015 consist of the following (in thousands):


	January 1, 2015		Acquisition ⁽¹⁾		Effect of Foreign Currency		December 31, 2015
Americas	$	193,831	$	-	$	(7,782)	$	186,049
EMEA		-		10,054		(370)		9,684

	$	193,831	$	10,054	$	(8,152)	$	195,733


⁽¹⁾		See Note 2, Acquisitions, for further information.

The Company performs its annual goodwill impairment test during the third quarter, or more frequently, if indicators of impairment exist.

For the annual goodwill impairment test, the Company elected to forgo the option to first assess qualitative factors and performed its annual two-step goodwill impairment test as of July 31, 2015. Under ASC 350, the carrying value of assets is calculated at the reporting unit level. The quantitative assessment of goodwill includes comparing a reporting unit’s calculated fair value to its carrying value. The calculation of fair value requires significant judgments including estimation of future cash flows, which is dependent on internal forecasts, estimation of the long-term rate of growth, the useful life over which cash flows will occur and determination of the Company’s weighted average cost of capital. Changes in these estimates and assumptions could materially affect the determination of fair value and/or conclusions on goodwill impairment for each reporting unit. If the fair value of the reporting unit is less than its carrying value, goodwill is considered impaired and an impairment loss is recorded to the extent that the fair value of the goodwill within the reporting unit is less than its carrying value.

The process of evaluating the fair value of the reporting units is highly subjective and requires significant judgment and estimates as the reporting units operate in a number of markets and geographical regions. The Company used an average of the income and market approaches to determine its best estimates of fair value which incorporated the following significant assumptions:

●

Revenue projections, including revenue growth during the forecast periods;

●

EBITDA margin projections over the forecast periods;

●

Estimated income tax rates;

●

Estimated capital expenditures; and

●

Discount rates based on various inputs, including the risks associated with the specific reporting units as well as their revenue growth and EBITDA margin assumptions.

As of July 31, 2015, the Company concluded that goodwill was not impaired for all five of its reporting units with goodwill. While the fair values of four of the reporting units were substantially in excess of their carrying value, the Qelp reporting unit’s fair value approximated its carrying value due to the proximity to the acquisition date of July 2, 2015. The newly acquired Qelp reporting unit’s carrying value was $15.6 million at July 31, 2015, including $9.9 million of goodwill.

The Qelp reporting unit is at risk for future impairment if projected operating results are not met or other inputs into the fair value measurement change. However, as of June 30, 2016 and December 31, 2015, there were no indicators of impairment.

- 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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