Intangible Assets and Goodwill

3 Months Ended

Jun. 30, 2014

Goodwill and Intangible Assets Disclosure [Abstract]

6. Intangible Assets and Goodwill

The following table reflects the components of intangible assets as of:



	June 30, 2014			March 31, 2014
Amortizable asset management contracts
Cost	$	179,893		$	207,224
Accumulated amortization	(170,417		)	(197,255		)
Net	9,476			9,969
Indefinite–life intangible assets
U.S. domestic mutual fund management contracts	2,106,351			2,106,351
Permal/Fauchier funds-of-hedge fund management contracts	698,104			698,104
Other fund management contracts	304,725			304,549
Trade names	52,800			52,800
	3,161,980			3,161,804
Intangible assets, net	$	3,171,456		$	3,171,773

In connection with the previously discussed agreement to sell LMIC, amortizable asset management contracts with a cost of $36,864 and accumulated amortization of $30,205 were reclassified to assets held for sale. See Note 3 for additional information.

As of Legg Mason's most recent annual impairment test as of December 31, 2013, the assessed fair value of the indefinite-life domestic mutual funds contracts asset related to the Citigroup Asset Management ("CAM") acquisition exceeded the carrying value by approximately 21%; and the assessed fair value of the indefinite-life funds-of-hedge funds contracts asset related to the Permal and Fauchier acquisitions exceeded the combined carrying values by approximately 10%. Should market performance, flows, or related AUM levels decrease in the near term such that cash flow projections deviate from current projections, it is reasonably possible that the assets could be deemed to be impaired by a material amount.

As of June 30, 2014, amortizable asset management contracts are being amortized over a weighted-average remaining life of 8.6 years.

Estimated amortization expense for each of the next five fiscal years is as follows:



Remaining 2015	$	1,018
2016	1,188
2017	1,188
2018	1,188
2019	1,188
Thereafter	3,706
Total	$	9,476

The change in the carrying value of goodwill is summarized below:



	Gross Book Value			Accumulated Impairment			Net Book Value
Balance as of March 31, 2014	$	2,402,423		$	(1,161,900	)	$	1,240,523
Impact of excess tax basis amortization	(5,429		)	—			(5,429		)
Business acquisition, net of $8,104 reclassification relating to LMIC (See Note 3)	8,150			—			8,150
Other, including changes in foreign exchange rates	6,317			—			6,317
Balance as of June 30, 2014	$	2,411,461		$	(1,161,900	)	$	1,249,561

- 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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