Goodwill And Intangible Assets

12 Months Ended

Dec. 31, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in a business combination. Intangible assets resulting from the acquisitions of entities accounted for using the purchase method of accounting are recorded at the estimated fair value of the assets acquired. Identifiable intangible assets are comprised of purchased customer relationships, trademarks and trade names, developed technologies and other intangible assets. The fair values of these identified intangible assets are based upon expected future cash flows or income, which take into consideration certain assumptions such as customer turnover, trade names and patent lives. These determinations are primarily based upon the Company’s historical experience and expected benefit of each intangible asset. If it is determined that such assumptions are not accurate, then the resulting change will impact the fair value of the intangible asset. Identifiable intangible assets are amortized over the period of estimated economic benefit, which ranges from one to 20 years.

The changes in carrying amounts of goodwill for the year ended December 31, 2016 and 2015 are as follows (in thousands):



	Business Cloud Services			Digital Media			Consolidated
Balance as of January 1, 2015	$	390,063		$	245,612		$	635,675
Goodwill acquired	108,913			63,680			172,593
Purchase Accounting Adjustments	10,900			(4,289		)	6,611
Foreign exchange translation	(7,158		)	(60		)	(7,218		)
Balance as of December 31, 2015	$	502,718		$	304,943		$	807,661
Goodwill acquired	69,202			263,988			333,190
Purchase accounting adjustments	816			(4,957		)	(4,141		)
Foreign exchange translation	(13,584		)	(316		)	(13,900		)
Balance as of December 31, 2016	$	559,152		$	563,658		$	1,122,810

Purchase accounting adjustments relate to adjustments to goodwill in connection with prior years business acquisitions. See Note 3 - Business Acquisitions - for a discussion related to purchase accounting adjustments.

Intangible assets are summarized as of December 31, 2016 and 2015 as follows (in thousands):

Intangible Assets with Indefinite Lives:



	2016		2015
Trade names	$	27,379	$	27,379
Other	5,432		5,432
Total	$	32,811	$	32,811

In accordance with ASC 350, the Company performed the annual impairment test for goodwill for fiscal year 2016 using a qualitative assessment primarily taking into consideration macroeconomic, industry and market conditions, overall financial performance and any other relevant company-specific events. The Company performed the annual impairment test for intangible assets with indefinite lives for fiscal 2016 using a qualitative assessment primarily taking into consideration macroeconomic, industry and market conditions, overall financial performance and any other relevant company-specific events. j2 Global concluded that there were no impairments in 2016, 2015 and 2014.

Intangible Assets Subject to Amortization:

As of December 31, 2016, intangible assets subject to amortization relate primarily to the following (in thousands):



	Weighted-Average Amortization Period	Historical Cost		Accumulated Amortization		Net
Trade names	11.5 years	$	127,342	$	38,868	$	88,474
Patent and patent licenses	6.6 years	65,605		51,677		13,928
Customer relationships ⁽¹⁾	9.6 years	390,930		182,775		208,155
Other purchased intangibles	6.0 years	195,913		27,590		168,323
Total		$	779,790	$	300,910	$	478,880

⁽¹⁾ Historically, the Company has amortized its customer relationship assets in a pattern that best reflects the pace in which the assets’ benefits are consumed. This pattern results in a substantial majority of the amortization expense being recognized in the first 4 to 5 years, despite the overall life of the asset.

During the year ended December 31, 2016, the Company acquired Everyday Health (see Note 3 - Business Acquisitions). The identified intangible assets recognized as part of the acquisition and their respective estimated weighted average amortizations were as follows (in thousands):



	December 31, 2016
	Weighted-Average Amortization Period	Fair Value
Trademarks	5.2 years	70,300
Customer relationships	10.1 years	45,500
Other purchased intangibles	1.7 years	88,267
Total		$	204,067

During the year ended December 31, 2016, the Company completed 21 other acquisitions which were individually immaterial. The identified intangible assets recognized as part of these acquisition and their respective estimated weighted average amortizations were as follows (in thousands):



	December 31, 2016
	Weighted-Average Amortization Period	Fair Value
Trade names	6.3 years	$	5,866
Customer relationships	7.5 years	39,982
Other purchased intangibles	3.3 years	2,997
Total		$	48,845

During the year ended December 31, 2015, the Company completed 24 acquisitions which were individually immaterial. The identified intangible assets recognized as part of these acquisition and their respective estimated weighted average amortizations were as follows (in thousands):



	December 31, 2015
	Weighted-Average Amortization Period	Fair Value
Trade names	4.6 years	$	22,602
Customer relationships	7.4 years	98,027
Other purchased intangibles	3.7 years	1,873
Total		$	122,502

As of December 31, 2015, intangible assets subject to amortization relate primarily to the following (in thousands):



	Weighted-Average Amortization Period	Historical Cost		Accumulated Amortization		Net
Trade names	12.0 years	$	117,753	$	26,167	$	91,586
Patent and patent licenses	8.3 years	64,258		45,417		18,841
Customer relationships ⁽¹⁾	9.4 years	313,909		116,590		197,319
Other purchased intangibles	4.2 years	33,088		21,004		12,084
Total		$	529,008	$	209,178	$	319,830

Expected amortization expenses for intangible assets subject to amortization at December 31, 2016 are as follows (in thousands):



Fiscal Year:
2017	$	117,544
2018	96,423
2019	75,542
2020	34,991
2121	28,082
Thereafter	126,298
Total expected amortization expense	$	478,880

Amortization expense was $95.3 million, $74.0 million and $47.4 million for the years ended December 31, 2016, 2015 and 2014, respectively.

- 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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