Goodwill and Other Intangible Assets

6 Months Ended

Jun. 30, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

The changes in the carrying amount of goodwill, allocated by reportable segments, were as follows (See Note 13):



(Dollar amounts in thousands)	Merchant Acquiring, net		Payment Processing			Business Solutions			Total
Balance at December 31, 2016	$	138,121	$	186,688		$	46,177		$	370,986
Adjustment to goodwill from prior year acquisition	—		1,099			—			1,099
Foreign currency translation adjustments	—		(516		)	(365		)	(881		)
Balance at June 30, 2017	$	138,121	$	187,271		$	45,812		$	371,204

Goodwill is tested for impairment on an annual basis, or more often if events or changes in circumstances indicate there may be impairment. For 2016, the Company used the qualitative assessment option or step zero process. Using this process, the Company first assessed whether it was “more likely than not” that the fair value of a reporting unit was less than its carrying amount. The Company conducted a qualitative assessment of each reporting unit’s fair value, or step zero process, as of August 31, 2016. As part of the Company’s qualitative assessment, Management considered the results of the Company’s 2015 impairment test (which indicated that the fair value of each reporting unit was in excess of it carrying amount by 120.9%—145.5%) as well as current market conditions and changes in the carrying amount of the Company’s reporting units that occurred subsequent to the 2015 impairment test. Based on the results of this qualitative assessment, EVERTEC believes the fair value of goodwill for each of the Company’s reporting units continues to exceed their respective carrying amounts and concluded that it was not necessary to conduct the two-step goodwill impairment test. There were no triggering events or changes in circumstances that, subsequent to the impairment test, would have required an additional impairment evaluation. No impairment losses were recognized for the six months ended June 30, 2017 or 2016.

The carrying amount of other intangible assets at June 30, 2017 and December 31, 2016 was as follows:



		June 30, 2017
(Dollar amounts in thousands)	Useful life in years	Gross amount		Accumulated amortization			Net carrying amount
Customer relationships	8 - 14	$	334,207	$	(154,632	)	$	179,575
Trademark	10 - 15	39,950		(23,382		)	16,568
Software packages	3 -10	185,892		(128,815		)	57,077
Non-compete agreement	15	56,539		(25,443		)	31,096
Other intangible assets, net		$	616,588	$	(332,272	)	$	284,316



		December 31, 2016
(Dollar amounts in thousands)	Useful life in years	Gross amount		Accumulated amortization			Net carrying amount
Customer relationships	8 - 14	$	334,455	$	(141,829	)	$	192,626
Trademark	10 - 15	39,950		(21,650		)	18,300
Software packages	3 - 10	176,267		(121,055		)	55,212
Non-compete agreement	15	56,539		(23,558		)	32,981
Other intangible assets, net		$	607,211	$	(308,092	)	$	299,119

For the three and six months ended June 30, 2017, the Company recorded amortization expense related to other intangibles of $12.2 million and $24.2 million, respectively, compared to $11.4 million and $22.7 million for the corresponding 2016 period.

The estimated amortization expense of the balances outstanding at June 30, 2017 for the next five years is as follows:



(Dollar amounts in thousands)
Remaining 2017	$	23,689
2018	43,436
2019	39,943
2020	35,115
2021	31,845

- 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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