Intangible Assets and Goodwill

6 Months Ended

Sep. 30, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

6. Intangible Assets and Goodwill

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



	September 30, 2016			March 31, 2016
Amortizable intangible asset management contracts and other
Cost	$	430,753		$	259,513
Accumulated amortization	(183,266		)	(171,169		)
Net⁽¹⁾	247,487			88,344
Indefinite–life intangible assets
U.S. domestic mutual fund management contracts	2,106,351			2,106,351
Clarion Partners fund management contracts⁽¹⁾	505,200			—
Permal funds-of-hedge funds management contracts	334,104			334,104
EnTrust fund management contracts⁽¹⁾	262,300			—
Other fund management contracts	547,255			560,499
Trade names⁽¹⁾	87,069			57,187
	3,842,279			3,058,141
Intangible assets, net	$	4,089,766		$	3,146,485


(1)	As of September 30, 2016, Amortizable intangible asset management contracts, net and Trade names include $98,275 and $23,100, respectively, related to the acquisition of Clarion Partners and $62,089 and $7,400, respectively, related to the acquisition of EnTrust. See Note 3 for additional information.

Certain of Legg Mason's intangible assets are denominated in currencies other than the U.S. dollar and balances related to these assets will fluctuate with changes in the related foreign currency exchange rates.

As of Legg Mason's most recent annual impairment test as of December 31, 2015, the assessed fair value of the Permal indefinite-life funds-of-hedge funds management contracts intangible asset and the Permal trade name asset declined below their carrying values, and accordingly were impaired during the year ended March 31, 2016. Should market performance, flows, and 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.

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 48% as of December 31, 2015.

Legg Mason determined that no triggering events occurred as of September 30, 2016, that would require further impairment testing.

As of September 30, 2016, amortizable intangible asset management contracts and other are being amortized over a weighted-average remaining life of 9.2 years.

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



Remaining fiscal 2017	$	14,409
2018	28,170
2019	27,879
2020	27,589
2021	27,589
Thereafter	121,851
Total	$	247,487

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



	Gross Book Value			Accumulated Impairment			Net Book Value
Balance as of March 31, 2016	$	2,641,416		$	(1,161,900	)	$	1,479,516
Impact of excess tax basis amortization	(10,415		)	—			(10,415		)
Business acquisitions⁽¹⁾	502,778			—			502,778
Changes in foreign exchange rates and other	(13,225		)	—			(13,225		)
Balance as of September 30, 2016	$	3,120,554		$	(1,161,900	)	$	1,958,654

(1) See Note 3 for additional information.

- 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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