Goodwill and Other Intangible Assets

3 Months Ended

Feb. 29, 2012

Goodwill and Other Intangible Assets [Abstract]

Goodwill and Other Intangible Assets

Note 11. Goodwill and Other Intangible Assets

Goodwill

The following table is a summary of the changes to goodwill for the three months ended February 29, 2012 (in thousands):

	Three Months Ended February 29, 2012
Balance, at beginning of period	$	365,574
Add: Translation adjustments		(66	)
Balance, at end of period	$	365,508

At least annually, and more frequently if warranted, we assess goodwill for impairment. We completed our annual test of goodwill as of June 1, 2011 and performed additional impairment testing as of November 30, 2011. As of June 1 and November 30, 2011 no goodwill impairment was identified. Periodically estimating the fair value of a reporting unit requires significant judgment and often involves the use of significant estimates and assumptions. These estimates and assumptions could have a significant effect on whether or not an impairment charge is recorded and the magnitude of such a charge. Further, adverse market or economic events could result in impairment charges in future periods.

All goodwill is assigned to our Capital Markets segment and is deductible for tax purposes.

Intangible Assets

The following table presents the gross carrying amount, accumulated depreciation and net carrying amount of identifiable intangible assets and weighted average amortization period as of February 29, 2012 and November 30, 2011 (in thousands):

	February 29, 2012
	Gross cost		Accumulated amortization			Net carrying amount		Weighted average remaining lives (years)
Exchange and clearing organization membership interests and registrations	$	11,219	$	—		$	11,219		N/A
Customer relationships		10,542		(3,128	)		7,414		6.7
Trade name		1,680		(578	)		1,102		1.8
Other		100		(8	)		92		13.5
	$	23,541	$	(3,714	)	$	19,827

	November 30, 2011
	Gross cost		Accumulated amortization			Net carrying amount		Weighted average remaining lives (years)
Exchange and clearing organization membership interests and registrations	$	11,219	$	—		$	11,219		N/A
Customer relationships		10,542		(2,776	)		7,766		6.9
Trade name		1,300		(361	)		939		1.1
Other		100		(8	)		92		13.8
	$	23,161	$	(3,145	)	$	20,016

The aggregate amortization expense for the three months ended February 29, 2012 and February 28, 2011 was $0.6 million and $0.2 million, respectively. Amortization expense is included in Other expenses on the Consolidated Statements of Earnings.

The estimated future amortization expense for the next five fiscal years are as follows (in thousands):

Fiscal year	Estimated future amortization expense
2012 (Period from April to November)	$	1,690
2013		1,319
2014		929
2015		771
2016		771
2017		714

Mortgage Servicing Rights

In the normal course of business we originate military housing mortgage loans and sell such loans to investors. In connection with these activities we may retain the mortgage servicing rights that entitle us to a future stream of cash flows based on contractual serving fees. Mortgage servicing rights to military housing mortgage loans are accounted for as an intangible asset and included within Other assets in the Consolidated Statements of Financial Condition. The mortgage servicing rights are amortized over the period of the estimated net servicing income, which is reported in Other income in the Consolidated Statements of Earnings. We provide no credit support in connection with the servicing of these loans and are not required to make servicing advances on the loans in the underlying portfolios. We determined that the servicing rights represent one class of servicing rights based on the availability of market inputs to measure the fair value of the asset and our treatment of the asset as one aggregate pool for risk management purposes. We earned fees related to these servicing rights of $1.1 million and $0.9 million during the three months ended February 29, 2012 and February 28, 2011, respectively.

The following presents the activity in the balance of these servicing rights for the three months ended February 29, 2012 and twelve months ended November 30, 2011 (in thousands):

	Three Months Ended February 29, 2012			Twelve Months Ended November 30, 2011
Balance, beginning of period	$	8,202		$	8,263
Add: Acquisition		162			347
Less: Pay down		(211	)		—
Less: Amortization		(97	)		(408	)
Balance, end of period	$	8,056		$	8,202

We estimate the fair value of these servicing rights was $15.5 million and $15.6 million at February 29, 2012 and November 30, 2011, respectively. Mortgage servicing rights do not trade in an active, open market with readily observable prices. Accordingly, the fair value of servicing rights is estimated using a discounted cash flow model, which projects future cash flows discounted at a risk-adjusted rate based on recently observed transactions for interest-only bonds backed by military housing mortgages. Estimated future cash flows consider contracted servicing fees and costs to service. Given the underlying asset class, assumptions regarding repayment and delinquencies are not significant to the fair value.