Goodwill and Purchased Intangible Assets

5. Goodwill and Purchased Intangible Assets

Goodwill

The following table presents the changes in goodwill by business segment during the three months ended March 31, 2014:



	Market Services		Listing Services		Information Services		Technology Solutions		Total

	(in millions)
Balance at December 31, 2013	$	3,433	$	136	$	2,019	$	598	$	6,186
Goodwill acquired		-		-		-		-		-
Foreign currency translation adjustment		(7)		-		(4)		(2)		(13)
Balance at March 31, 2014	$	3,426	$	136	$	2,015	$	596	$	6,173

As of March 31, 2014, the amount of goodwill that is expected to be deductible for tax purposes in future periods is $861 million, of which $493 million is related to our acquisition of eSpeed and $294 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. There was no impairment of goodwill for the three months ended March 31, 2014 and 2013, 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:



	March 31, 2014								December 31, 2013
	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	$	37	$	(12)	$	25		5	$	39	$	(12)	$	27		5
Customer relationships		1,075		(309)		766		19		1,075		(292)		783		19
Other		5		(3)		2		8		5		(3)		2		8
Foreign currency translation adjustment		2		-		2				3		-		3
Total finite-lived intangible assets	$	1,119	$	(324)	$	795			$	1,122	$	(307)	$	815

Indefinite-Lived Intangible Assets
Exchange and clearing registrations	$	790	$	-	$	790			$	790	$	-	$	790
Trade names		756		-		756				756		-		756
Licenses		51		-		51				51		-		51
Foreign currency translation adjustment		(30)		-		(30)				(26)		-		(26)
Total indefinite-lived intangible assets	$	1,567	$	-	$	1,567			$	1,571	$	-	$	1,571
Total intangible assets	$	2,686	$	(324)	$	2,362			$	2,693	$	(307)	$	2,386

Amortization expense for purchased finite-lived intangible assets was $18 million for the three months ended March 31, 2014 and $13 million for the three months ended March 31, 2013.

The estimated future amortization expense (excluding the impact of foreign currency translation adjustment) of purchased finite-lived intangible assets as of March 31, 2014 is as follows:



	(in millions)
2014(1)	$	52
2015		68
2016		67
2017		65
2018		61
2019 and thereafter		480
Total	$	793

(1) Represents the estimated amortization to be recognized for the remaining nine months of 2014.

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 relief from royalty method. These charges are recorded in asset impairment charges in the Condensed Consolidated Statements of Income for the three months ended March 31, 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.

- 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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