Goodwill and Other Intangibles

3 Months Ended

Mar. 31, 2012

Goodwill and Other Intangibles

Goodwill and Other Intangibles

(8) Goodwill and Other Intangibles

The following table presents the changes in the carrying amount of goodwill by reportable segment for the three-month period ended March 31, 2012 (dollars in thousands):

	U.S. Operations		European Operations			Asia Pacific Operations		Total
Balance as of December 31, 2011	$	245,105	$	28,486		$	701	$	274,292
Currency translation adjustment	5		(14		)	—		(9		)
Balance as of March 31, 2012	$	245,110	$	28,472		$	701	$	274,283

Goodwill impairment

The Company tests the carrying value of goodwill for impairment 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.  As the indicators of potential impairment have not changed significantly, the Company continues to perform interim goodwill impairment testing at the end of each quarterly period.  The interim impairment tests apply the same valuation techniques and sensitivity analyses used in the Company’s prior annual impairment test to updated cash flow forecasts.

At March 31, 2012, the U.S. and European reporting units were evaluated for impairment using the two-step test.  Based on the results of the interim Step one testing, no goodwill impairment was indicated as the fair value of the U.S. and European reporting units was determined to be in excess of their carrying value by 14% and 40%, respectively. Analysis was also performed examining the sensitivity of the fair values of the reporting units by using more stringent growth and discount rate scenarios relative to the initial assumptions used to see if the resulting impact on fair values would have resulted in a different Step one conclusion.  None of the outcomes of the sensitivity analyses performed led to a conclusion that goodwill was impaired.

The Hong Kong reporting unit was tested using the qualitative assessment option afforded under ASU 2011-08.  Based upon this assessment, it was concluded that it was not more likely than not that its fair value was less than its carrying value (therefore, the two-step test was not required).  This conclusion was reached based upon relevant events and circumstances including recent fair value testing (where fair value was substantially in excess of carrying value on a consistent basis), consistently improving regional financial performance and the outlook for the continued growth of electronic trading in the region.

While the Company has determined the estimated fair values of its reporting units to be appropriate based on the forecasted level of revenue growth, net income and cash flows, in the current market environment it is a reasonable possibility that a reporting unit may become impaired in future periods as there can be no assurance that the estimates and assumptions made for purposes of goodwill interim impairment testing as of March 31, 2012 will prove to be accurate predictions of the future.  A “reasonable possibility” refers to a potential occurrence that is judged to be more than remote, but less than probable.  The Company will continue to monitor economic trends related to its business as well as re-examine the key assumptions used in it s impairment testing.

Other Intangible Assets

Acquired other intangible assets consisted of the following at March 31, 2012 and December 31, 2011 (dollars in thousands):

	March 31, 2012				December 31, 2011
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization		Useful Lives (Years)
Trade names	$	10,400	$	1,358	$	10,400	$	1,293	5.0
Customer-related intangibles	27,851		5,051		27,851		4,497		13.1
Proprietary software	20,876		14,544		20,876		14,036		6.4
Trading rights	243		—		243		—		—
Other	50		—		50		—		—
Total	$	59,420	$	20,953	$	59,420	$	19,826

At March 31, 2012, 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 of other intangibles was $1.1 million and $1.0 million for the three months ended March 31, 2012 and 2011, respectively, and was included in other general and administrative expense in the Condensed Consolidated Statements of Income.

During the three months ended March 31, 2012, no other intangibles were deemed impaired, and accordingly, no adjustment was required.