Goodwill

Goodwill, which represents the cost of acquired companies in excess of the fair value of the net assets at the acquisition date, is subject to annual impairment testing in the fourth quarter of each year or when events or changes in circumstances indicate the carrying amount may not be recoverable. Recorded goodwill has been allocated to the Company's reporting units based on the relative fair value of each acquired reporting unit. Management evaluates the recoverability of goodwill by comparing the carrying value of the Company's reporting units to their fair value. Fair value is determined using discounted cash flows, supplemented by market-based assessments of fair value. Impairment is measured as the difference between the resulting implied fair value of goodwill and its recorded carrying value. The determination of fair value is significantly impacted by estimates for each of the Company's markets related to current valuations, current and future economic conditions, and the Company's strategic plans. Due to uncertainties in the estimation process and significant volatility in demand for new housing, actual results could differ significantly from such estimates.

The Company recorded $1.5 billion of goodwill in connection with the merger with Centex Corporation ("Centex"), which was completed in August 2009. All goodwill associated with prior transactions has been previously written-off. Since the Centex merger, the Company has recorded impairments at various times of the associated goodwill. These impairments have resulted from a variety of factors, including, among other things, deteriorations in market conditions, the Company's operating results falling below previously forecasted levels, and a sustained decline in the Company's market capitalization since the Centex merger.

In the third quarters of both 2011 and 2010, the Company performed event-driven assessments of the recoverability of goodwill. These assessments were necessary primarily due to sustained declines in the Company's market capitalization. In performing the goodwill impairment analyses, the Company followed similar approaches using management's estimates of the future cash flows for each reporting unit, which are required to consider the decrease in the Company's market capitalization. The results of these analyses determined that goodwill impairment charges of $240.5 million and $654.9 million in the third quarters of 2011 and 2010, respectively, were required. The Company also recorded a goodwill impairment charge of $1.4 million in the second quarter of 2010 in conjunction with the completion of its business combination accounting for the Centex merger. Goodwill impairment charges are reflected in other expense (income), net.


Reporting Segment	Balance at December 31, 2010		Additions		Impairments			Disposals		Balance at September 30, 2011
East	$	60,494	$	—	$	(60,494	)	$	—	$	—
Gulf Coast		92,095		—		(92,095	)		—		—
West		87,952		—		(87,952	)		—		—

Total goodwill	$	240,541	$	—	$	(240,541	)	$	—	$	—

The following summarizes the change in goodwill during 2010 ($000's omitted):


Reporting Segment	Balance at December 31, 2009		Additions		Impairments			Disposals			Balance at September 30, 2010
East	$	327,032	$	1,104	$	(267,642	)	$	—		$	60,494
Gulf Coast		353,434		679		(262,018	)		—			92,095
West		213,859		731		(126,638	)		—			87,952
Financial Services		1,593		—		—			(1,593	)		—

Total goodwill	$	895,918	$	2,514	$	(656,298	)	$	(1,593	)	$	240,541

Intangible assets

Intangible assets consist of trademarks and tradenames acquired in connection with the 2009 acquisition of Centex and the 2001 acquisition of Del Webb. These intangible assets were valued at the respective acquisition dates and are being amortized over 20-year lives. The ultimate realization of these assets is dependent upon estimates of future earnings and benefits that the Company expects to generate from their use. In both the third quarters of 2011 and 2010, the Company performed event-driven assessments of the recoverability of these assets using projected undiscounted cash flows. In each instance, the Company determined that no impairment existed. However, if expectations of future results and cash flows decrease significantly or if our strategy related to the use of such intangible assets changes, the related intangible assets may be impaired.