GOODWILL AND OTHER INTANGIBLE ASSETS
|12 Months Ended|
Dec. 31, 2016
|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, 2016, 2015 and 2014 resulted in no impairment of goodwill.
In the first quarter of 2016, we acquired Veda, which operates primarily in Australia and New Zealand. We have included Veda's operations within a newly-created Asia Pacific reporting unit within the International operating segment. Additionally, we moved the TDX Australia and India operations that were included in our Europe reporting unit to the Asia Pacific reporting unit to align with how we manage our business. Our financial results for the years ended December 31, 2015 and 2014, reflect our new organizational structure. Lastly in 2016, we have renamed our Personal Solutions operating segment Global Consumer Solutions.
To reflect this new organizational structure, we have reallocated goodwill from the Europe reporting unit to the Asia Pacific reporting unit based on the relative fair values of the respective portions of Europe. A change in reporting units requires that goodwill be tested for impairment. During 2016, we performed goodwill impairment tests prior to and following the reallocation of goodwill, which resulted in no impairment.
In the third quarter of 2016, we acquired Barnett and Computersoft for which the acquired goodwill has been allocated between the Verification Services and Employer Services reporting units within the Workforce Solutions operating segment.
In 2015, the personal solutions business in the United Kingdom was consolidated into the North America Global Consumer Solutions operating segment, which was reorganized into the Global Consumer Solutions operating segment. Additionally in 2015, the direct to consumer reseller businesses in the U.S., Canada, and the United Kingdom were also consolidated into the Global Consumer Solutions operating segment. These changes were driven by an enterprise wide strategy to maximize the penetration of our products and services in our targeted markets. We determined that market focus and operating efficiency could be further improved by reorganizing and consolidating the United States, Canada and the United Kingdom Global Consumer Solutions and direct to consumer reseller operating activities into one segment, Global Consumer Solutions.
To reflect this new organizational structure, we have reallocated goodwill from the USIS, Canada, and Europe reporting units to the Global Consumer Solutions reporting unit based on the relative fair values of the respective portions of USIS, Canada, and Europe. A change in reporting units requires that goodwill be tested for impairment. During 2015, we performed goodwill impairment tests prior to and following the reallocation of goodwill for USIS, Canada, Europe and Global Consumer Solutions, which resulted in no impairment.
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, 2016 and 2015, are as follows:
(1)The December 31, 2014 balances have been recast to reflect the new organizational structure. As of December 31, 2014, the Global Consumer Solutions goodwill includes $49.3 million and $88.8 million of goodwill from the USIS and International segments, respectively.
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 2016 annual impairment test completed during the third quarter of 2016 resulted in no impairment of indefinite-lived intangible assets.
Purchased Intangible Assets. Purchased intangible assets net, recorded on our Consolidated Balance Sheets at December 31, 2016 and 2015, are as follows:
Amortization expense related to purchased intangible assets was $176.5 million, $122.3 million, and $129.9 million during the twelve months ended December 31, 2016, 2015, and 2014, respectively.
Estimated future amortization expense related to definite-lived purchased intangible assets at December 31, 2016 is as follows:
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.
Reference 1: http://www.xbrl.org/2003/role/presentationRef