Goodwill and Acquired Client Relationships

12 Months Ended

Dec. 31, 2012

Goodwill and Acquired Client Relationships

Goodwill and Acquired Client Relationships

20. Goodwill and Acquired Client Relationships

The following table presents the change in Goodwill during 2011 and 2012:

	Institutional			Mutual Fund			High Net Worth			Total

Balance, as of December 31, 2010	$	1,073.6		$	786.7		$	261.6		$	2,121.9
Goodwill acquired		0.1			—			1.3			1.4
Foreign currency translation		(2.3	)		(1.7	)		(2.0	)		(6.0	)

Balance, as of December 31, 2011	$	1,071.4		$	785.0		$	260.9		$	2,117.3
Goodwill acquired		0.3			151.3			74.3			225.9
Foreign currency translation		6.8			3.2			2.0			12.0

Balance, as of December 31, 2012	$	1,078.5		$	939.5		$	337.2		$	2,355.2

The following table reflects the components of intangible assets of the Company's Affiliates that are consolidated as of December 31, 2011 and 2012:

	Acquired Client Relationships

	Definite-lived									Indefinite-lived			Total
	Gross Book Value			Accumulated Amortization			Net Book Value			Net Book Value			Net Book Value
Balance, as of December 31, 2010	$	971.1		$	(228.5	)	$	742.6		$	678.0		$	1,420.6
New Investments		—			—			—			—			—
Amortization and impairments		—			(88.5	)		(88.5	)		(9.2	)		(97.7	)
Foreign currency translation		(0.6	)		—			(0.6	)		(1.2	)		(1.8	)

Balance, as of December 31, 2011	$	970.5		$	(317.0	)	$	653.5		$	667.6		$	1,321.1
New Investments		131.1			—			131.1			321.5			452.6
Amortization and impairments		—			(97.8	)		(97.8	)		(102.2	)		(200.0	)
Foreign currency translation		1.1			—			1.1			10.7			11.8
Transfers and other		6.9			31.3			38.2			(38.2	)		—

Balance, as of December 31, 2012	$	1,109.6		$	(383.5	)	$	726.1		$	859.4		$	1,585.5

During 2011, the Company completed impairment assessments on its goodwill and definite-lived acquired client relationships and no impairments were indicated. During 2011, the Company determined that fair value of the indefinite-lived intangible assets at one of its Affiliates, a growth-oriented manager of U.S. equity mutual funds, had declined below its carrying value and, accordingly, recognized an impairment of $9.2 million.

During 2012, the Company completed impairment assessments on its goodwill and definite-lived acquired client relationships and no impairments were indicated. During 2012, the Company determined that the fair value of the indefinite-lived intangible asset at one of its Affiliates, a manager of growth-oriented U.S. equity mutual funds, had declined below its carrying value and, accordingly, recognized an impairment of $102.2 million. The fair value of this asset ($38.2 million) was calculated using a discounted cash flow analysis, a Level 3 fair value measurement. The significant assumptions used in the valuation were assets under management (declining approximately 10% annually) and a discount rate of 15%. While the Company generally considers investment advisory contracts between its Affiliates and their sponsored registered investment companies to have an indefinite life, it was determined that the useful life of this asset was no longer indefinite. Accordingly, in 2012, the Company reclassified the remaining acquired client relationships to definite-lived and began to recognize amortization related to the asset.

For the Company's Affiliates that are consolidated, definite-lived acquired client relationships are amortized over their expected useful lives. As of December 31, 2012, these relationships were being amortized over a weighted average life of approximately eleven years. The Company estimates that its consolidated annual amortization expense will be approximately $100 million for the next five years, assuming no additional investments in new or existing Affiliates.

- 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.

+ References+ Details