Goodwill and Other Intangible Assets

3 Months Ended

Feb. 28, 2013

Note 12.

Goodwill and Other Intangible Assets

Goodwill

The following table is a summary of the changes to goodwill for the three months ended February 28, 2013 (in thousands):


	Three Months Ended February 28, 2013

Balance, at beginning of period	$	365,670
Add: Contingent consideration		2,394
Add: Translation adjustments		(1,287	)

Balance, at end of period	$	366,777

Contingent consideration recorded during the three months ended February 28, 2013 relates to the lapse of certain conditions as specified in the purchase agreements associated with the acquisition of LongAcre Partners in 2007.

At least annually, and more frequently if warranted, we assess goodwill for impairment. We completed our annual test of goodwill as of June 1, 2012 and concluded goodwill was not impaired. 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 in the future 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 tables present the gross carrying amount, accumulated amortization, net carrying amount and weighted average amortization period of identifiable intangible assets as of February 28, 2013 and November 30, 2012 (in thousands):


	February 28, 2013
	Gross cost		Accumulated amortization			Net carrying amount		Weighted average remaining lives (years)
Exchange and clearing organization membership interests and registrations	$	6,996	$	—		$	6,996		N/A
Customer relationships		10,542		(4,397	)		6,145		7.7
Trade name		1,680		(1,395	)		285		4.0
Other		100		(17	)		83		12.5

	$	19,318	$	(5,809	)	$	13,509


	November 30, 2012
	Gross cost		Impairment losses			Accumulated amortization			Net carrying amount		Weighted average remaining lives (years)
Exchange and clearing organization membership interests and registrations	$	11,219	$	(2,873	)	$	—		$	8,346		N/A
Customer relationships		10,542		—			(4,107	)		6,435		7.9
Trade name		1,680		—			(1,287	)		393		3.5
Other		100		—			(15	)		85		12.8

	$	23,541	$	(2,873	)	$	(5,409	)	$	15,259

During the three months ended February 28, 2013, we sold our membership interest in the Kansas City Board of Trade reducing the gross cost of Exchange and clearing organization membership interests and registrations to $7.0 million.

Intangible assets with an indefinite useful life are not amortized but assessed annually for impairment, or more frequently when certain events or circumstances exist. During the second fiscal quarter of 2012, as a result of a significant decline in the fair value of our exchange and clearing organization membership interests and registrations we recognized an impairment loss of $2.9 million. Fair values were based on prices of public sales which had declined over the past year.

Regarding intangible assets with a finite life, aggregate amortization expense for the three months ended February 28, 2013 and February 29, 2012 was $0.4 million and $0.6 million, respectively, which is included in Other expenses on the Consolidated Statements of Earnings.

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


Fiscal year	Estimated future amortization expense

2013	$	933
2014		926
2015		768
2016		768
2017		707

Mortgage Servicing Rights

Mortgage servicing rights for 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 revenues 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 $114,000 and $1.1 million during the three months ended February 28, 2013 and February 29, 2012, respectively.

The following presents the activity in the balance of these servicing rights for the three months ended February 28, 2013 and year ended November 30, 2012 (in thousands):


	Three Months Ended February 28, 2013			Year Ended November 30, 2012

Balance, beginning of period	$	805		$	8,202
Add: Acquisition		—			162
Less: Sales, net		—			(6,959	)
Less: Pay down		—			(211	)
Less: Amortization		(10	)		(389	)

Balance, end of period	$	795		$	805

On November 30, 2012, we sold substantially all of our mortgage servicing rights for approximately $30.9 million and granted the investor an option to purchase the remaining servicing rights for military housing projects held for $2.0 million, the estimated 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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