Goodwill and Acquired Intangible Assets

12 Months Ended

Dec. 31, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

The following table presents the changes in goodwill by business segment during the year ended December 31, 2016:



	Market Services			Corporate Services			Information Services			Market Technology			Total
	(in millions)
Balance at December 31, 2015	$	2,941		$	467		$	1,823		$	164		$	5,395
Goodwill acquired	549			234			54			—			837
Foreign currency translation adjustment	(100		)	(27		)	(71		)	(7		)	(205		)
Balance at December 31, 2016	$	3,390		$	674		$	1,806		$	157		$	6,027

The goodwill acquired for Market Services and Information Services shown above relates to our acquisitions of ISE and Nasdaq CXC, and the goodwill acquired for Corporate Services shown above relates to our acquisitions of Boardvantage and Marketwired. See “2016 Acquisitions,” of Note 4, “Acquisitions,” for further discussion.

As of December 31, 2016, the amount of goodwill that is expected to be deductible for tax purposes in future periods is $879 million, of which $561 million is related to our acquisition of eSpeed, $237 million is related to our acquisition of the TR Corporate businesses, and $81 million is related to other acquisitions.

Goodwill represents the excess of purchase price over the value assigned to the net assets, including 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 test goodwill for impairment at the reporting unit level annually, or in interim periods if certain events occur indicating that the carrying amount may be impaired, such as changes in the business climate, poor indicators of operating performance or the sale or disposition of a significant portion of a reporting unit. There was no impairment of goodwill for the years ended December 31, 2016 and 2015; 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.

* * * * * *

Acquired Intangible Assets

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



	December 31, 2016										December 31, 2015
	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	$	38		$	(24	)	$	14		5	$	39		$	(23	)	$	16		5
Customer relationships	1,394			(464		)	930			18	1,038			(387		)	651			20
Other	7			(6		)	1			6	5			(4		)	1			9
Foreign currency translation adjustment	(160		)	58			(102		)		(138		)	43			(95		)
Total finite-lived intangible assets	$	1,279		$	(436	)	$	843			$	944		$	(371	)	$	573
Indefinite-Lived Intangible Assets
Exchange and clearing registrations	$	1,257		$	—		$	1,257			$	790		$	—		$	790
Trade names	130			—			130				700			—			700
Licenses	52			—			52				51			—			51
Foreign currency translation adjustment	(188		)	—			(188		)		(155		)	—			(155		)
Total indefinite-lived intangible assets	$	1,251		$	—		$	1,251			$	1,386		$	—		$	1,386
Total intangible assets	$	2,530		$	(436	)	$	2,094			$	2,330		$	(371	)	$	1,959

Amortization expense for acquired finite-lived intangible assets was $82 million for the year ended December 31, 2016, $62 million for the year ended December 31, 2015 and $69 million for the year ended December 31, 2014. The increase in amortization expense in 2016 compared with 2015 was primarily due to additional acquired intangible assets in 2016. The decrease in amortization expense in 2015 compared with 2014 was primarily due to lower amortization expense on certain intangible assets that were impaired in 2015 as discussed below, partially offset by amortization expense on identifiable finite-lived intangible assets acquired in connection with the acquisition of DWA.

The estimated future amortization expense (excluding the impact of foreign currency translation adjustments of $102 million as of December 31, 2016) of acquired finite-lived intangible assets as of December 31, 2016 is as follows:



	(in millions)
2017	$	94
2018	90
2019	76
2020	75
2021	74
2022 and thereafter	536
Total	$	945

Intangible Asset Impairment Charges

We recorded the pre-tax, non-cash intangible asset impairment charges described below during 2016, 2015 and 2014.

During 2016, the eSpeed business continued to operate in a challenging environment and, as a result, experienced a decline in operating performance. In October 2016, a new head of FICC joined Nasdaq and, in late November and December 2016, the management team conducted an extensive business review of the eSpeed business. Based upon this review, management changed the strategic direction of our Fixed Income business and will more closely integrate the U.S. and European Fixed Income businesses under a single brand called Nasdaq Fixed Income. As part of this effort, we decided to no longer utilize the eSpeed trade name. In connection with these triggering events, following board approval in January 2017, we recorded a pre-tax, non-cash intangible asset impairment charge of $578 million to write off the full value of the eSpeed trade name as we no longer attribute any material value to the trade name. This charge is recorded in asset impairment charges in the Consolidated Statements of Income for 2016.

In 2015, in connection with our global rebranding initiative, we decided to change our company name from The NASDAQ OMX Group, Inc. to Nasdaq, Inc., which became effective in the third quarter of 2015. In connection with this action, we decided to discontinue the use of the OMX trade name and recorded a pre-tax, non-cash impairment charge of $119 million because we no longer attribute any material value to the trade name. This charge is recorded in restructuring charges in the Consolidated Statements of Income for 2015.

In 2014, we recorded a non-cash intangible asset impairment charge totaling $38 million related to an acquired intangible asset associated with customer relationships. The impairment resulted primarily from changes in the forecasted revenues associated with the acquired customer list of our eSpeed business. The fair value of customer relationships of $71 million was determined using the income approach, specifically the with-and-without method. This charge is recorded in asset impairment charges in the Consolidated Statements of Income for 2014.

These intangible asset impairment charges did not impact the company’s consolidated cash flows, liquidity, or capital resources and related primarily 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.

Significant judgments and unobservable inputs categorized as Level III in the fair value hierarchy are inherent in impairment tests performed and include assumptions about the amount and timing of expected future cash flows, growth rates and the determination of appropriate discount rates. We believe that the assumptions used in our impairment tests are reasonable, but variations in any of the assumptions may result in different calculations of fair value.

- 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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