Acquisitions

NYSE Acquisition

On November 13, 2013, we acquired 100% of NYSE in a stock and cash transaction. The total purchase price was $11.1 billion comprised of cash consideration of $2.7 billion and 42.4 million shares of our common stock. The fair value of the shares issued was $8.3 billion based on the closing share price of our common stock of $197.80 per share on November 12, 2013. The cash consideration was funded from cash on hand, $1.4 billion of net proceeds received on October 8, 2013 in connection with the offering of the Senior Notes (as defined below) and $400 million of borrowings on October 31, 2013 under the Revolving Facility (as defined below) (Note 9). The acquisition has been accounted for as a purchase business combination with ICE considered the acquirer of NYSE for accounting purposes.

Under purchase accounting, the total purchase price was allocated to NYSE’s tangible and identifiable intangible assets and liabilities based on the estimated fair values of those assets as of November 13, 2013, as set forth below. The excess of the purchase price over the net tangible and identifiable intangible assets was recorded as goodwill. Goodwill represents potential revenue synergies related to clearing and new product development, expense synergies related to technology and clearing, and opportunities to enter new markets. The purchase price allocation is as follows (in millions):



Property and equipment	$	636
Goodwill	7,208
Identifiable intangible assets	8,516
Other assets and liabilities, net	286
Deferred tax liabilities on identifiable intangible assets	(2,701		)
Short-term and long-term debt	(2,529		)
Non-controlling interests	(327		)
Total purchase price	$	11,089

In performing the purchase price allocation, we considered, among other factors, the intended future use of acquired assets, analysis of historical financial performance and estimates of future performance of NYSE’s business. The allocation of the purchase price was finalized upon the completion of the analysis of the acquired assets and liabilities during the year ended December 31, 2014. We adjusted the purchase price allocation based on updated fair value analyses of the NYSE tangible and intangible assets and liabilities, with the offset of these changes to goodwill. We identified changes to the fair value of certain customer relationships intangible assets, acquired deferred tax asset and liabilities, valuation allowances, liabilities for uncertain income tax and indirect tax positions, and accrued liabilities during the measurement period. These adjustments were based on information obtained during the measurement period about facts and circumstances that existed as of the acquisition date. The fair value adjustments reflected in the tables above and below, primarily result in an increase in the customer relationships intangible assets of $60 million, a decrease in the deferred tax liabilities on identifiable intangible assets of $33 million, an increase in other assets and liabilities, net, of $127 million, and a corresponding decrease to goodwill of $214 million. These changes to the consolidated balance sheet amounts have been reflected on the December 31, 2013 consolidated balance sheet retroactively. The statement of income impact for the year ended December 31, 2013 relating to these fair value adjustments is not material to our consolidated financial statements.

The following table sets forth the components of the intangible assets associated with the acquisition as of December 31, 2014 (in millions, except years):



Intangible Assets	Acquisition-Date Fair Value		Foreign Currency Translation		De-Consolidation of Euronext and NYSE Technologies (Note 16)			Accumulated Amortization			Net Book Value		Useful Life
Exchange registrations, licenses and contracts	$	6,960	$	8	$	(1,258	)	$	—		$	5,710	Indefinite
Customer relationships	1,128		1		(168		)	(56		)	905		17-25 years
Trade names	315		—		(30		)	(4		)	281		1 year to Indefinite
Developed technology	113		—		(23		)	(35		)	55		3 years
Total	$	8,516	$	9	$	(1,479	)	$	(95	)	$	6,951

The acquisition-date identifiable intangible assets consist of intangibles derived from national securities and futures exchange registrations, licenses and contracts, customer relationships, trade names and developed technology, of which customer relationships, certain trade names and developed technology are being amortized using the straight-line method over their estimated useful lives. Indefinite useful lives were assigned for exchange registrations, licenses and contracts since the registrations, licenses and contracts represent rights to operate the exchanges and trade the contracts in perpetuity based on the long history of the exchanges acquired and the contracts traded and the expectation that a market participant would continue to operate them indefinitely. An average 20-year useful life for customer relationships has been estimated based on the projected economic benefits associated with this asset. The average 20-year estimated useful life represents the approximate point in the projection period in which a majority of the asset’s cash flows are expected to be realized based on assumed attrition rates. Indefinite useful lives for the $310 million NYSE and Euronext trade names have been determined based on their long history in the marketplace, their continued use following the acquisition, and their importance to the business of NYSE and Euronext and prominence in the industry. A one-year useful life for the $5 million Liffe trade name has been estimated based on the period in which we expect a market participant would use the name prior to rebranding and the length of time the name is expected to maintain recognition and value in the marketplace. Developed technology represents both internally and externally developed software related to NYSE’s and Euronext's internal and trading operations. The exchange registrations and licenses and customer relationships intangible assets were valued using the multi-period excess earnings income approach, the trade names intangible assets were valued using the relief from royalty income approach and the developed technology intangible assets were valued using the multi-period excess earnings income approach and the replacement cost method.

Of the goodwill amount above, $2.5 billion is included in the futures reporting unit and $3.6 billion is included in the U.S. cash listings reporting unit for purposes of impairment testing as this is consistent with how it is reported internally to our chief operating decision maker. The $948 million in goodwill originally included in the Euronext reporting unit and $123 million originally included in the technology reporting unit were de-recognized upon the IPO of Euronext and sale of NYSE Technologies (Note 16).

The accompanying consolidated financial statements include the NYSE results of operations and cash flows for the year ended December 31, 2014 and for the period from November 13, 2013 through December 31, 2013. Total revenues, less transaction-based expenses of $208 million and NYSE income from continuing operations of $30 million are included in our consolidated statement of income for the year ended December 31, 2013. We have incurred employee termination costs following the acquisition, which are included in acquisition-related transaction and integration costs, including $99 million and $44 million for the years ended December 31, 2014 and 2013, respectively.

The financial information in the table below summarizes the combined results of operations of ICE and NYSE, on a pro forma basis, as though the companies had been combined as of the beginning of the period presented. The pro forma financial information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of the period presented. Such pro forma financial information is based on the historical financial statements of ICE and NYSE. This pro forma financial information is based on estimates and assumptions that have been made solely for purposes of developing such pro forma information, including, without limitation, purchase accounting adjustments. The pro forma financial information presented below also includes depreciation and amortization based on the valuation of NYSE's tangible assets and identifiable intangible assets resulting from the acquisition. The pro forma financial information does not reflect any synergies or operating cost reductions that have been and may be achieved from the combined operations. Pro forma financial information for the year ended December 31, 2012 is not provided below, as doing so would be impracticable. Such information would require significant estimates of discontinued operations amounts, which would not provide accurate evidence of circumstances that existed in 2012, and for which discrete financial information of the disposed entity was not available when the 2012 financial statements were issued. The pro forma financial information combines the historical results for us and NYSE for the year ended December 31, 2013 in the following table (in millions, except per share amounts).



Total revenues, less transaction-based expenses	$	3,013
Operating income	1,373
Income from continuing operations	774
Income from discontinued operations, net of tax	217
Net income attributable to ICE	991
Basic earnings per common share:
Continuing operations	$	6.75
Discontinued operations	1.90
Basic earnings per share	$	8.65
Diluted earnings per share
Continuing operations	$	6.71
Discontinued operations	1.89
Diluted earnings per share	$	8.60

SuperDerivatives Acquisition

On October 7, 2014, we acquired 100% of the outstanding common stock of SuperDerivatives Inc. ("SuperDerivatives"), a leading provider of risk management analytics, financial market data and valuation services for $358 million in cash, of which $44 million is currently held in escrow (Note 4). The acquisition is intended to accelerate our multi-asset class clearing, risk management and market data strategy.

The SuperDerivatives purchase price was allocated to the net tangible and identifiable intangible assets based on the fair value of those assets as of October 7, 2014. The preliminary net tangible and identifiable intangible assets acquired were $51 million, inclusive of preliminary intangible assets of $62 million. Preliminary identifiable intangible assets primarily consist of developed technology for $53 million, which have been assigned a five-year useful life, and customer relationships for $9 million, which have been assigned a 12- year useful life. The excess of the purchase price over the preliminary net tangible and identifiable intangible assets was $307 million and was recorded as goodwill and assigned to the futures reporting unit. We have not yet obtained all of the information related to the fair value of the acquired assets and liabilities related to the acquisition to finalize the purchase price allocation. The primary areas of the preliminary purchase price allocation that are not yet finalized relate to the valuation of the identifiable intangible assets, income taxes and certain other tangible assets and liabilities and the valuation of these items will be finalized during 2015.

SMX Acquisition

On February 3, 2014, we acquired 100% of the outstanding common stock of Singapore Mercantile Exchange Pte. Ltd. ("SMX"). The acquisition included Singapore Mercantile Exchange Clearing Corporation Pte. Ltd. (“SMXCC”), a wholly-owned subsidiary of SMX which was the clearing house for all SMX trades. SMX operated commodity futures markets in Singapore. SMX and SMXCC retain licenses to operate as an approved exchange and an approved clearing house, regulated by the Monetary Authority of Singapore. These licenses provided us with exchange and clearing licenses in Asia. The exchange and clearing infrastructures are expected to transition to our trading and clearing platforms in the first half of 2015, subject to regulatory approval. As a result, a period of business transition is currently underway and the exchange and clearing house have been temporarily closed. SMX and SMXCC have been renamed ICE Futures Singapore and ICE Clear Singapore, respectively.

The SMX purchase price was allocated to the net tangible and identifiable intangible assets based on the fair value of those assets as of February 3, 2014. The net tangible and identifiable intangible assets acquired were $49 million, inclusive of intangible assets of $31 million for exchange registrations and licenses, which have been assigned an indefinite life. The excess of the purchase price over the net tangible and identifiable intangible assets was $105 million and was recorded as goodwill and assigned to the futures reporting unit.

Holland Clearing House Acquisition

On December 2, 2014, we acquired 75% of the outstanding common stock of Holland Clearing House N.V. (“HCH”), to support our clearing strategy for financial products. ABN AMRO Clearing Bank N.V. ("ABN AMRO") retained the remaining 25% minority interest in HCH. HCH is a continental European derivatives clearing house based in Amsterdam and is the primary clearing house for The Order Machine ("TOM"), a multi-lateral trading facility for equity options. HCH is regulated and supervised in the Netherlands by the Authority for the Financial Markets and the Dutch Central Bank and is also EMIR authorized. ABN AMRO's 25% ownership has been recorded as “redeemable non-controlling interest” for $16 million in the accompanying consolidated balance sheet as of the December 2, 2014 acquisition date.

The HCH purchase price was allocated to the net tangible and identifiable intangible assets based on the fair value of those assets as of December 2, 2014. The preliminary net tangible and identifiable intangible assets acquired were $30 million, inclusive of preliminary intangible assets of $21 million. Preliminary identifiable intangible assets primarily consist of clearing licenses for $18 million, which have been assigned an indefinite useful life. The excess of the purchase price over the preliminary net tangible and identifiable intangible assets was $33 million and was recorded as goodwill and assigned to the futures reporting unit. We have not yet obtained all of the information related to the fair value of the acquired assets and liabilities related to the acquisition to finalize the purchase price allocation. The primary areas of the preliminary purchase price allocation that are not yet finalized relate to the valuation of the identifiable intangible assets, income taxes and certain other tangible assets and liabilities and the valuation of these items will be finalized during 2015.

True Office Acquisition

On October 31, 2014, we acquired 100% of True Office, a developer of interactive technology-driven training services for compliance and risk management, sales training, customer support and professional development. The True Office purchase price was allocated to the net tangible and identifiable intangible assets based on the fair value of those assets as of October 31, 2014. The preliminary net tangible and identifiable intangible assets acquired were $2 million, inclusive of preliminary intangible assets of $3 million primarily for developed technology, which have been assigned a five-year useful life. We have not yet obtained all of the information related to the fair value of the acquired assets and liabilities related to the acquisition to finalize the purchase price allocation. The primary areas of the preliminary purchase price allocation that are not yet finalized relate to the valuation of the identifiable intangible assets, income taxes and certain other tangible assets and liabilities and the valuation of these items will be finalized during 2015.

ICE Endex Acquisition

On March 26, 2013, we acquired 79% of the derivatives and spot business of the energy exchange formerly known as APX-ENDEX. Gasunie, a European natural gas infrastructure company and a former stockholder of APX-ENDEX, retained the remaining 21% stake. We renamed the acquired business ICE Endex and it is based on the derivatives and spot gas business of the former APX-ENDEX. ICE Endex offers a liquid, transparent and accessible continental European trading hub for natural gas and power derivatives, gas balancing markets and gas storage services. The trade execution and clearing of ICE Endex derivatives products transitioned to our trading platform and to ICE Clear Europe, respectively, on October 7, 2013. ICE Endex is based in Amsterdam and one of its subsidiaries retains a license to operate a regulated market in the Netherlands. ICE Endex expands our ability to serve participants in the continental European natural gas and power markets.

The ICE Endex purchase price was allocated to the net tangible and identifiable intangible assets based on the fair value of those assets as of March 26, 2013. The net tangible and identifiable intangible assets acquired were $43 million. We have recorded intangible assets of $52 million for exchange traded contracts, which have been assigned an indefinite useful life. The excess of the purchase price over the net tangible and identifiable intangible assets was $23 million and was recorded as goodwill and assigned to the futures reporting unit.