Goodwill and Other Assets

9 Months Ended

Sep. 30, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Other Assets

The Company’s three reportable operating segments are Eurasia Banking, Americas Banking and Retail. The Company has allocated goodwill to its Eurasia Banking, Americas Banking and Retail reportable operating segments. The changes in carrying amounts of goodwill within the Company's segments are summarized as follows:



	Eurasia Banking			Americas Banking			Retail			Total
Goodwill	$	513.0		$	425.4		$	350.6		$	1,289.0
Accumulated impairment losses	(168.7		)	(122.0		)	—			(290.7		)
Balance at January 1, 2017	$	344.3		$	303.4		$	350.6		$	998.3
Goodwill acquired	1.6			—			4.0			5.6
Goodwill adjustment	(1.1		)	(1.0		)	(0.8		)	(2.9		)
Currency translation adjustment	71.8			2.2			42.1			116.1
Goodwill	$	585.3		$	426.6		$	395.9		$	1,407.8
Accumulated impairment losses	(168.7		)	(122.0		)	—			(290.7		)
Balance at December 31, 2017	$	416.6		$	304.6		$	395.9		$	1,117.1
Currency translation adjustment	(17.9		)	(5.5		)	(11.1		)	(34.5		)
Goodwill	$	567.4		$	421.1		$	384.8		$	1,373.3
Impairment	(98.1		)	—			(101.2		)	(199.3		)
Accumulated impairment losses	(266.8		)	(122.0		)	(101.2		)	(490.0		)
Balance at September 30, 2018	$	300.6		$	299.1		$	283.6		$	883.3

The Company identified four reporting units, which are Eurasia Banking, Americas Banking, Europe, Middle East and Africa (EMEA) Retail and Rest of World Retail. Management determined that the Americas Banking reporting unit had excess fair value of $168.4 or 25.9 percent cushion when compared to its carrying amount. The Eurasia Banking, EMEA Retail and Rest of World Retail reporting units had no excess fair value or cushion when compared to their carrying amounts. Changes in certain assumptions or the Company's failure to execute on the current plan could have a significant impact to the estimated fair value of the reporting units.

As a result of certain impairment triggering events, the Company performed an impairment test of goodwill for its four reporting units during the third quarter of 2018. Based on the results of the impairment testing, the Company recorded a non-cash goodwill impairment loss of $109.3 related to the Eurasia Banking, EMEA Retail and Rest of World Retail reporting units during the third quarter of 2018. During the second quarter of 2018, the Company performed an impairment test of goodwill for all of its line of businesses (LoB) reporting units due to the change in its reportable operating segments. Based on the results of the LoB testing, the fair values of each of the Company's reporting units exceed their carrying values except for the Services-Asia Pacific (AP) and Software-EMEA reporting units which resulted in a non-cash impairment loss of $90.0 during the second quarter 2018. The Company recognized a non-cash goodwill impairment loss of $199.3 during the nine months ended 2018. In 2017, the Company recorded impairments totaling $3.1 related to information technology (IT) transformation and integration activities.

During the third and second quarter 2018, the Company estimated the fair value of its reporting units using a combination of the income valuation and market approach methodologies. The determination of the fair value of a reporting unit requires significant estimates and assumptions, including significant unobservable inputs. The key inputs included, but were not limited to, discount rates, terminal growth rates, market multiple data from selected guideline public companies, management’s internal forecasts which include numerous assumptions such as projected net sales, gross profit, sales mix, operating and capital expenditures and earnings before interest and taxes margins, among others.

The following summarizes information on intangible assets by major category:



		September 30, 2018							December 31, 2017
	Weighted-average remaining useful lives	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Customer relationships, net	6.9 years	$	722.2	$	(162.5	)	$	559.7	$	741.5	$	(108.2	)	$	633.3

Internally-developed software	1.8 years	208.5		(122.1		)	86.4		192.9		(99.8		)	93.1
Development costs non-software	0.4 years	53.2		(43.2		)	10.0		55.3		(35.1		)	20.2
Other intangibles	0.9 years	74.8		(59.3		)	15.5		84.5		(57.3		)	27.2
Other intangible assets, net		336.5		(224.6		)	111.9		332.7		(192.2		)	140.5
Total		$	1,058.7	$	(387.1	)	$	671.6	$	1,074.2	$	(300.4	)	$	773.8

Amortization expense on capitalized software of $8.8 and $8.6 was included in service and software cost of sales for the three months ended September 30, 2018 and 2017, respectively. Amortization expense on capitalized software of $25.6 and $27.9 was included in service and software cost of sales for the nine months ended September 30, 2018 and 2017, respectively. The Company's total amortization expense, including deferred financing costs, was $38.2 and $42.7 the three months ended September 30, 2018 and 2017, respectively. The Company's total amortization expense, including deferred financing costs, was $114.8 and $121.6 for the nine months ended September 30, 2018 and 2017, respectively.

In 2018, the Company acquired the remaining portion of the noncontrolling interest in its China operations for $5.8 for which no goodwill was recorded. In 2017, the $5.6 acquired goodwill from Moxx Group B.V. (Moxx) and Visio Objekt GmbH (Visio) primarily relates to anticipated synergies achieved through increased scale and higher utilization of the service organization.

- 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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