Annual report pursuant to Section 13 and 15(d)

GOODWILL AND OTHER INTANGIBLE ASSETS

v2.4.1.9
GOODWILL AND OTHER INTANGIBLE ASSETS
12 Months Ended
Dec. 31, 2014
Goodwill and Intangible Assets Disclosure [Abstract]  
GOODWILL AND OTHER INTANGIBLE ASSETS
GOODWILL AND OTHER INTANGIBLE ASSETS
 
Goodwill.   Goodwill represents the cost in excess of the fair value of the net assets acquired in a business combination. As discussed in Note 1, goodwill is tested for impairment at the reporting unit level on an annual basis and on an interim basis if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. We perform our annual goodwill impairment tests as of September 30 each year. The fair value estimates for our reporting units were determined using a combination of the income and market approaches in accordance with the Company’s methodology. Our annual impairment tests as of September 30, 2014, 2013 and 2012 resulted in no impairment of goodwill.
 
On July 1, 2014 the North America Commercial Solutions operating segment was consolidated into the U.S. Consumer Information Solutions and International operating segments. The change was driven by an enterprise wide distribution marketing strategy to maximize the penetration of our products and services in our targeted markets. In an effort to accelerate our penetration and simplify how our commercial information customers interact with us, we have reorganized our operating segments. The U.S. portion of the North America Commercial Solutions (“NACS”) operating segment was consolidated into the U.S. Consumer Information Solutions operating segment. The combined operating segment was renamed U.S. Information Solutions. The Canadian portion of the NACS operating segment was consolidated into the Canada operations of the International operating segment. To reflect this new organizational structure, we have reallocated goodwill from NACS reporting unit to U.S. Information Solutions and Canada reporting units based on the relative fair values of the respective
portions of NACS, in accordance with ASC 350. When reporting units are changed, ASC 350 requires that goodwill be tested for impairment. During the third quarter of 2014, we performed our goodwill impairment test prior to and following the reallocation of goodwill, which resulted in no impairment.

Changes in the amount of goodwill for the twelve months ended December 31, 2014 and 2013, are as follows:    
 
U.S.
Information
Solutions
 
International
 
Workforce Solutions
 
North America
Personal
Solutions
 
Total
 
(In millions)
Balance, December 31, 2012 (1)
$
969.4

 
$
385.2

 
$
934.0

 
$
1.8

 
$
2,290.4

Acquisitions

 
40.8

 

 
14.5

 
55.3

Adjustments to initial purchase price allocation
87.5

 
(0.1
)
 

 
0.4

 
87.8

Foreign currency translation

 
(8.0
)
 

 

 
(8.0
)
Tax benefits of options exercised

 

 
(0.2
)
 

 
(0.2
)
Businesses sold
(2.7
)
 
(1.4
)
 
(26.1
)
 

 
(30.2
)
Balance, December 31, 2013(1)
1,054.2

 
416.5

 
907.7

 
16.7

 
2,395.1

Acquisitions
66.4

 
173.8

 

 

 
240.2

Adjustments to initial purchase price allocation

 
2.1

 

 

 
2.1

Foreign currency translation

 
(30.5
)
 

 

 
(30.5
)
Tax benefits of options exercised

 

 
(0.1
)
 

 
(0.1
)
Balance, December 31, 2014
$
1,120.6

 
$
561.9

 
$
907.6

 
$
16.7

 
$
2,606.8


(1)    The December 31, 2013 and 2012 balances have been recast to reflect the new organizational structure. As of December 31, 2013, the USIS and International goodwill include $21.7 million and $15.5 million of goodwill, respectively, from the legacy NACS segment. As of December 31, 2012, the USIS and International goodwill include $21.7 million and $15.9 million of goodwill, respectively, from the legacy NACS segment.

 Indefinite-Lived Intangible Assets.   Indefinite-lived intangible assets consist of indefinite-lived reacquired rights representing the value of rights which we had granted to various affiliate credit reporting agencies that were reacquired in the U.S. and Canada.  At the time we acquired these agreements, they were considered perpetual in nature under the accounting guidance in place at that time and, therefore, the useful lives are considered indefinite. Indefinite-lived intangible assets are not amortized. We are required to test indefinite-lived intangible assets for impairment annually and whenever events or circumstances indicate that there may be an impairment of the asset value. We perform our annual indefinite-lived intangible asset impairment test as of September 30.  Our 2014 annual impairment test completed during the third quarter of 2014 resulted in no impairment of indefinite-lived intangible assets.  
 
Amount
 
(In millions)
Balance, December 31, 2012
$
254.5

Purchase price adjustment
(158.8
)
Foreign currency translation
(0.2
)
Balance, December 31, 2013
95.5

Foreign currency translation
(0.3
)
Balance, December 31, 2014
$
95.2


 
During the third quarter of 2013, we recorded adjustments to the purchased intangible assets and related accumulated amortization previously recorded in connection with our December 28, 2012 acquisition of certain credit services business assets and operations of Computer Sciences Corporation.  This correction resulted in the establishment of $73.3 million of finite-lived reacquired rights which will be amortized over 5.6 years, an increase in goodwill of $85.5 million and a reduction of our indefinite-lived intangible assets of $158.8 million
 
Purchased Intangible Assets.   Purchased intangible assets net, recorded on our Consolidated Balance Sheets at December 31, 2014 and 2013, are as follows:
 
December 31, 2014
 
December 31, 2013
 
Gross
 
Accumulated
Amortization
 
Net
 
Gross
 
Accumulated
Amortization
 
Net
Definite-lived intangible assets:
(In millions)
Purchased data files
$
692.0

 
$
(218.8
)
 
$
473.2

 
$
709.5

 
$
(187.4
)
 
$
522.1

Acquired software and technology
53.9

 
(26.4
)
 
27.5

 
38.4

 
(20.2
)
 
18.2

Customer relationships
570.7

 
(204.3
)
 
366.4

 
506.7

 
(166.5
)
 
340.2

Reacquired rights
73.3

 
(26.3
)
 
47.0

 
73.3

 
(13.1
)
 
60.2

Proprietary database
7.4

 
(5.4
)
 
2.0

 
7.4

 
(5.0
)
 
2.4

Non-compete agreements
27.0

 
(11.8
)
 
15.2

 
20.2

 
(7.8
)
 
12.4

Trade names and other intangible assets
51.1

 
(28.5
)
 
22.6

 
41.7

 
(24.0
)
 
17.7

Total definite-lived intangible assets
$
1,475.4

 
$
(521.5
)
 
$
953.9

 
$
1,397.2

 
$
(424.0
)
 
$
973.2


               
Amortization expense related to purchased intangible assets was $129.9 million, $118.4 million, and $86.1 million during the twelve months ended December 31, 2014, 2013, and 2012, respectively.
 
Estimated future amortization expense related to definite-lived purchased intangible assets at December 31, 2014 is as follows:
Years ending December 31,
Amount
 
(In millions)
2015
$
123.0

2016
114.8

2017
102.8

2018
84.3

2019
65.1

Thereafter
463.9

 
$
953.9