Goodwill and Intangible Assets

9 Months Ended

Sep. 30, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

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 and is assigned to the reporting unit that is expected to benefit from the synergies of the combination. Intangible assets resulting from the acquisitions of entities accounted for using the acquisition 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 nine months ended September 30, 2021 are as follows (in thousands):


	Fax and Martech		Voice, Backup, Security and CPP		Total Cloud Services		Digital Media		Consolidated
Balance as of January 1, 2021	$	425,471	$	499,025	$	924,496	$	942,934	$	1,867,430
Goodwill acquired (Note 4)	41,152		—		41,152		44,400		85,552
Goodwill removed due to sale of businesses (1)	—		(50,276)		(50,276)		—		(50,276)

Goodwill impairment (2)	—		(32,629)		(32,629)		—		(32,629)
Purchase accounting adjustments (3)	—		505		505		(1,468)		(963)
Foreign exchange translation	(3,462)		(3,890)		(7,352)		(430)		(7,782)
Balance as of September 30, 2021	$	463,161	$	412,735	$	875,896	$	985,436	$	1,861,332

(1) On February 9, 2021, in a cash transaction, the Company sold certain of its Voice assets in the United Kingdom which resulted in $1.3 million of goodwill being removed in connection with this sale and on September 17, 2021, the Company sold certain of its B2B Backup assets which resulted in $49.0 million of goodwill being removed in connection with the sale (see Note 6 - Dispositions).

(2) During the nine months ended September 30, 2021, the Company had an impairment to goodwill of $32.6 million in connection with certain B2B Backup assets.

(3) Purchase accounting adjustments relate to measurement period adjustments to goodwill in connection with prior business acquisitions (see Note 4 - Business Acquisitions).

Intangible Assets with Indefinite Lives:

Intangible assets are summarized as of September 30, 2021 and December 31, 2020 as follows (in thousands):


	September 30, 2021		December 31, 2020
Trade names	$	27,412	$	27,460
Other	4,317		4,329
Total	$	31,729	$	31,789

Intangible Assets Subject to Amortization:

As of September 30, 2021, intangible assets subject to amortization relate primarily to the following (in thousands):


	Weighted-Average Amortization Period	Historical Cost		Accumulated Amortization		Net
Trade names	9.7 years	$	258,382	$	107,472	$	150,910
Patent and patent licenses	5.4 years	67,962		67,250		712
Customer relationships (1)	8.6 years	764,852		462,955		301,897
Other purchased intangibles	4.2 years	468,934		313,020		155,914
Total		$	1,560,130	$	950,697	$	609,433

(1) Historically, the Company has amortized its customer relationship assets in a pattern that best reflects the pace at which the asset’s 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.

As of December 31, 2020, intangible assets subject to amortization relate primarily to the following (in thousands):


	Weighted-Average Amortization Period	Historical Cost		Accumulated Amortization		Net
Trade names	10.0 years	$	260,715	$	100,273	$	160,442
Patent and patent licenses	5.5 years	67,980		66,964		1,016
Customer relationships (1)	8.0 years	848,875		471,681		377,194
Other purchased intangibles	4.3 years	436,352		265,224		171,128
Total		$	1,613,922	$	904,142	$	709,780

Amortization expense, included in general and administrative expense, approximated $47.8 million and $41.2 million for the three months ended September 30, 2021 and 2020, respectively, and $144.3 million and $115.6 million for the nine months ended September 30, 2021 and 2020, respectively. Amortization expense is estimated to approximate $43.8 million, $143.5 million, $123.2 million, $80.2 million and $75.1 million for the remaining three months of fiscal year 2021 through fiscal year 2025, respectively, and $143.6 million thereafter through the duration of the amortization period.