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Goodwill and Other Intangibles

12 Months Ended

Dec. 31, 2011

(7) Goodwill and Other Intangibles

Goodwill

The following table presents the changes in the carrying amount of goodwill by reportable segment for the years ended December 31, 2011 and 2010 (dollars in thousands):

	U.S. Operations			European Operations		Asia Pacific Operations			Total

Balance at December 31, 2009	$	390,721		$	28,467	$	6,113		$	425,301
2010 Activity:
Impairment losses		—			—		(5,375	)		(5,375	)
Acquisition of Majestic		48,573			—		—			48,573
Currency translation adjustment		—			17		(37	)		(20	)

Balance at December 31, 2010	$	439,294		$	28,484	$	701		$	468,479

2011 Activity:
Impairment losses		(225,035	)		—		—			(225,035	)
Acquisition of RSEG		30,715			—		—			30,715
Majestic price adjustment		144			—		—			144
Currency translation adjustment		(13	)		2		—			(11	)

Balance at December 31, 2011	$	245,105		$	28,486	$	701		$	274,292

Goodwill impairment

The Company tests the carrying value of goodwill for impairment in accordance with ASC 350, Intangibles—Goodwill and Other, at least annually and more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. (See Note 2, Summary of Significant Accounting Policies).

During 2010, indicators of potential impairment prompted the Company to perform goodwill impairment tests at the end of each quarterly interim period. These indicators included a prolonged decrease in the Company's market capitalization, a decline in the Company's recent operating results in comparison to prior years, and the significant near-term uncertainty related to both the global economic recovery and the outlook for the Company's industry. As part of the June 30, 2010 interim test, it was determined that $5.4 million of goodwill related to the Company's Australian operations was impaired, as its fair value was determined to be below its carrying value, resulting in a $5.4 million non-cash charge against earnings.

Also during 2010, indicators of potential impairment prompted the Company to perform goodwill impairment tests at the end of each quarterly interim period. During 2011, the indicators of potential impairment did not improve and as a result, the Company continued to perform interim goodwill impairment testing at the end of each quarter. The interim impairment tests applied the same valuation techniques and sensitivity analyses used in the Company's prior annual impairment test to updated cash flow and profitability forecasts.

Based upon tests performed for the June 30, 2011 interim test, the Company recorded an impairment charge of $225.0 million in connection with the goodwill allocated to its U.S. Operations reporting unit. This impairment charge reflects continued weakness in institutional trading volumes, which lowered estimated future cash flows of the U.S. Operations reporting unit, and a decline in industry market multiples.

The Company performed its annual goodwill impairment testing using carrying values as of October 1, 2011. Based on the results of the annual testing, no impairment was indicated as the fair values of the U.S., European and Hong Kong Operations were determined to be in excess of their respective carrying values by 29%, 29% and 233%, respectively. The Company also performed interim goodwill impairment testing using carrying values as of December 31, 2011. There was also no impairment indicated for the U.S., European or Hong Kong Operations as the fair values of these reporting units were determined to be in excess of their respective carrying values by 20%, 30% and 227%, respectively. Additionally, none of the outcomes of the Company's sensitivity analyses performed led to a conclusion that goodwill was further impaired.

Although no further impairment of goodwill was indicated during the December 31, 2011 interim testing, the Company recognizes the reasonable possibility of additional goodwill impairment charges in future periods given the persistently unfavorable environment for the Company's business. It is not possible at this time to determine if any such future impairment charges would result or, if they do, whether such charges would be material. The use of the term "reasonable possibility" refers to a potential occurrence that is more than remote, but less than probable in management's judgment. The Company will continue to monitor economic trends related to its business as well as re-examine the key assumptions used in its annual and interim impairment testing.

Other Intangible Assets

Acquired other intangible assets consisted of the following at December 31, 2011 and 2010 (dollars in thousands):

	2011				2010

	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization		Useful Lives (Years)
Trade names	$	10,400	$	1,293	$	10,400	$	1,036		5.0
Customer related intangibles		27,851		4,497		20,901		2,571		13.1
Proprietary software		20,876		14,036		20,876		12,001		6.4
Trading rights		243		—		165		—		—
Other		50		—		50		—		—

Total	$	59,420	$	19,826	$	52,392	$	15,608

During 2011, the Company recorded a $7.0 million customer-related intangible asset with a useful life of 10 years related to the acquisition of RSEG.

At December 31, 2011, indefinite-lived intangibles not subject to amortization amounted to $8.7 million, of which $8.4 million related to the POSIT trade name. Amortization expense for definite-lived intangibles was $4.2 million, $3.0 million and $3.3 million for the years ended December 31, 2011, 2010 and 2009, respectively and was included in other general and administrative expense in the Consolidated Statements of Operations.

The Company's estimate of future amortization expense for acquired other intangibles that exist at December 31, 2011 is as follows (dollars in thousands):

Year	Estimated Amortization

2012	$	4,506
2013		4,506
2014		3,952
2015		2,602
2016		2,602
Thereafter		12,734

Total	$	30,902

The Company performed its annual impairment testing as of October 1 and determined that there was no impairment of the carrying values of goodwill or other intangible assets in the periods presented.

- 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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