5. Goodwill and Purchased Intangible Assets

Goodwill

In connection with the change in reportable segments discussed in Note 16, “Business Segments,” we reallocated the goodwill that existed as of December 31, 2012 to our new reporting units on a relative fair value basis.

The following table presents the changes in goodwill by business segment during the nine months ended September 30, 2013:



	Market Services		Listing Services		Information Services		Technology Solutions		Total

	(in millions)
Balance at December 31, 2012	$	2,955	$	136	$	1,964	$	280	$	5,335
Goodwill acquired		470		-		49		312		831
Foreign currency translation adjustment		14		1		8		2		25
Balance at September 30, 2013	$	3,439	$	137	$	2,021	$	594	$	6,191

As of September 30, 2013, the amount of goodwill that is expected to be deductible for tax purposes in future periods is $895 million, of which $510 million is related to our acquisition of eSpeed and $304 million is related to our acquisition of the TR Corporate Solutions businesses.

Goodwill represents the excess of the purchase price over the value assigned to the net tangible and identifiable intangible assets of a business acquired. Goodwill is allocated to our reporting units based on the assignment of the fair values of each reporting unit of the acquired company. We perform an annual goodwill impairment test during the fourth quarter of our fiscal year using carrying amounts as of October 1. Should certain events or indicators of impairment occur between annual impairment tests, we will perform the impairment test as those events or indicators occur. We assess goodwill impairment at the reporting unit level.

During the first quarter of 2013, we performed a goodwill impairment assessment as a result of our change in reportable segments. For purposes of performing the impairment test for goodwill, our six reporting units are the Market Services segment, the Listing Services segment, the two businesses comprising the Information Services segment: Market Data Products and Index Licensing and Services, and the two businesses comprising the Technology Solutions segment: Corporate Solutions and Market Technology. We allocated goodwill to each reporting unit based on its relative fair value. We then compared the fair value of the reporting units to the reporting units’ carrying amount and determined that goodwill was not impaired since the fair values of each of the reporting units exceeded their carrying amounts. However, events such as economic weakness or unexpected significant declines in operating results of a reporting unit may result in goodwill impairment charges in the future.

Purchased Intangible Assets

The following table presents details of our total purchased intangible assets, both finite- and indefinite-lived:



	September 30, 2013								December 31, 2012
	Gross Amount		Accumulated Amortization		Net Amount		Weighted-Average Useful Life (in Years)		Gross Amount		Accumulated Amortization		Net Amount		Weighted-Average Useful Life (in Years)

	(in millions)								(in millions)
Finite-Lived Intangible Assets
Technology	$	40	$	(10)	$	30		5	$	26	$	(10)	$	16		5
Customer relationships		1,075		(278)		797		19		871		(238)		633		21
Other		6		(3)		3		8		6		(2)		4		8
Foreign currency translation adjustment		4		-		4				6		(1)		5
Total finite-lived intangible assets	$	1,125	$	(291)	$	834			$	909	$	(251)	$	658

Indefinite-Lived Intangible Assets
Exchange and clearing registrations	$	790	$	-	$	790			$	790	$	-	$	790
Trade names		760		-		760				185		-		185
Licenses		51		-		51				51		-		51
Foreign currency translation adjustment		(26)		-		(26)				(34)		-		(34)
Total indefinite-lived intangible assets	$	1,575	$	-	$	1,575			$	992	$	-	$	992
Total intangible assets	$	2,700	$	(291)	$	2,409			$	1,901	$	(251)	$	1,650

Amortization expense for purchased finite-lived intangible assets was $18 million for the three months ended September 30, 2013, $13 million for the three months ended September 30, 2012, $44 million for the nine months ended September 30, 2013, and $39 million for the nine months ended September 30, 2012.

The estimated future amortization expense (excluding the impact of foreign currency translation adjustment) of purchased finite-lived intangible assets as of September 30, 2013 is as follows:



	(in millions)
2013⁽¹⁾	$	18
2014		71
2015		69
2016		67
2017		65
2018 and thereafter		540
Total	$	830

(1) Represents the estimated amortization to be recognized for the remaining three months of 2013.

Intangible Asset Impairment Charges

In the first quarter of 2013, we recorded non-cash intangible asset impairment charges totaling $10 million related to certain acquired intangible assets associated with customer relationships ($7 million) and a certain trade name ($3 million). These impairments resulted primarily from changes in the forecasted revenues associated with the acquired customer list of FTEN, Inc., or FTEN. The fair value of customer relationships was determined using the income approach, specifically the multi-period excess earnings method. The fair value of the trade name was determined using the income approach, specifically the RFRM. These charges are recorded in asset impairment charges in the Condensed Consolidated Statements of Income for the nine months ended September 30, 2013. These impairment charges related to our Market Services segment. However, for segment reporting purposes, these charges were allocated to corporate items based on the decision that these charges should not be used to evaluate the segment’s operating performance.

In the second quarter of 2012, we recorded non-cash intangible asset impairment charges totaling $28 million related to certain acquired finite-lived intangible assets associated with technology ($19 million), customer relationships ($6 million), and certain trade names ($3 million). These impairments resulted primarily from the replacement of certain acquired technology, as well as changes in the forecasted revenues associated with the acquired customer list of certain businesses. The fair value of technology and trademarks was determined using the income approach, specifically the RFRM. The fair value of customer relationships was determined using the income approach, specifically the multi-period excess earnings method. These charges were recorded in asset impairment charges in the Condensed Consolidated Statements of Income for the nine months ended September 30, 2012. Of the total impairment charge recorded during the second quarter of 2012, $17 million related to our Market Services segment and $11 million related to our Technology Solutions segment. However, for segment reporting purposes, these charges were allocated to corporate items based on the decision that these charges should not be used to evaluate the segment’s operating performance.