Goodwill and Other Intangible Assets

9 Months Ended

Sep. 30, 2014

Goodwill and Intangible Assets Disclosure [Abstract]

Note 4 – Goodwill and Other Intangible Assets

The changes in the carrying amount of goodwill, allocated by reportable segments, were as follows (See Note 12):


(Dollar amounts in thousands)	Merchant Acquiring, net		Payment Processing			Business Solutions			Total
Balance at December 31, 2013	$	138,121	$	187,622		$	47,376		$	373,119
Foreign currency translation adjustments		—		(2,906	)		(909	)		(3,815	)

Balance at September 30, 2014	$	138,121	$	184,716		$	46,467		$	369,304

Goodwill is tested for impairment at least annually, or more often if events or circumstances indicate there may be impairment, using the qualitative assessment option or step zero process. Using this process, the Company first assesses whether it is “more likely than not” that the fair value of a reporting unit is less than its carrying amount.

During the third quarter of 2014, the Company completed the qualitative assessment described above and determined that there were no impairment losses to be recognized during the period. There were no triggering events or changes in circumstances that subsequent to the impairment test would have required an additional impairment evaluation. As part of the Company’s qualitative assessment, EVERTEC considered the results for the 2011 impairment test (which indicated that the fair value of each reporting unit was in excess of 30% of its carrying amount) as well as current market conditions and changes in the carrying amount of the Company’s reporting units that occurred subsequent to the 2011 impairment test.

The carrying amount of other intangible assets at September 30, 2014 and December 31, 2013 consisted of the following:


(Dollar amounts in thousands)		September 30, 2014
	Useful life in years	Gross amount		Accumulated amortization			Net carrying amount
Customer relationships	14	$	312,811	$	(89,909	)	$	222,902
Trademark	10 - 15		39,950		(13,856	)		26,094
Software packages	3 - 10		129,249		(81,459	)		47,790
Non-compete agreement	15		56,539		(15,077	)		41,462

Other intangible assets, net		$	538,549	$	(200,301	)	$	338,248


(Dollar amounts in thousands)		December 31, 2013
	Useful life in years	Gross amount		Accumulated amortization			Net carrying amount
Customer relationships	14	$	314,036	$	(73,180	)	$	240,856
Trademark	10 - 15		39,950		(11,258	)		28,692
Software packages	3 - 10		119,598		(65,655	)		53,943
Non-compete agreement	15		56,539		(12,250	)		44,289

Other intangible assets, net		$	530,123	$	(162,343	)	$	367,780

For the three and nine months ended September 30, 2014, the Company recorded amortization expense related to other intangibles of $12.7 million and $37.9 million, respectively, compared to $13.6 million and $40.9 million for the corresponding 2013 periods.

The estimated amortization expense of the balances outstanding at September 30, 2014 for the next five years is as follows:


(Dollar amounts in thousands)
Remaining 2014	$	12,358
2015		46,588
2016		36,228
2017		33,237
2018		31,377
2019		30,609

- 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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