EQUITY METHOD INVESTMENTS

12 Months Ended

Dec. 31, 2012

EQUITY METHOD INVESTMENTS

EQUITY METHOD INVESTMENTS

19. EQUITY METHOD INVESTMENTS

The Company has investments accounted for under the equity method (see Note 2) with an aggregate carrying value of $26,743 and $28,997, at December 31, 2012 and 2011, respectively, and which are included in Other assets. Included within Equity in net earnings of unconsolidated businesses was $8,569, $10,466 and $3,974 in 2012, 2011 and 2010, respectively, related to these investments. The Company also provides clearing and other administrative services to certain of these equity method investments.

Investments accounted for under the equity method included the following:

· Investments in a number of unconsolidated U.K. brokerage and trading operations acquired in the July 1, 2010 acquisition of Kyte and investments made by Kyte subsequent to the Company’s acquisition; and

· Investments in a number of U.S. based brokerage, trading and investment firms.

For material investments accounted for under the equity method, which include certain brokerage businesses located in the U.K., total revenues, gross profit, net income and the Company’s contractual share of affiliates’ operating results, on an aggregate basis, for the year ended December 31, 2012 were $70,277, $48,558, $38,742, and $6,798, respectively. The aforementioned investees report on a different fiscal year end than the Company.  Therefore, the Company has made certain estimates with the summarized financial information provided by management of these equity method investments to align the fiscal year-ends. Total assets and total liabilities, on an aggregate basis, for these material investments were $14,558 and $7,299 at December 31, 2012, respectively. The summarized financial information was prepared in accordance with U.K. GAAP, which the Company has determined is not materially different than if these amounts were prepared in accordance with U.S. GAAP.

As of December 31, 2012, the Company also had 13 investments accounted for under the equity method, which were not included in the paragraph above, as management had determined these investments to be immaterial individually and in the aggregate.

During the year ended December 31, 2011, the Company recorded a $1,863 loss related to the accounting impact of an increased ownership stake in an equity method investment previously accounted for under the cost method. During the year ended December 31, 2011, the Company recorded $521 of pre-tax income representing the Company’s share of equity in prior period earnings of an equity-method investee.

The Company reviews investments accounted for under the equity method for decline in value that may be other than temporary.  During the year ended December 31, 2012, the Company did not record any write-downs related to equity method investments.  During the year ended December 31, 2011, the Company recorded write-downs of $4,717 related to equity method investments that were determined to be impaired on an other-than-temporary basis. The value of the Company’s ownership interest in these entities was evaluated in light of recent and projected operating losses of these investees. A decline in current and projected cash flows resulted in the value of the Company’s ownership interests being less than the carrying amount of these investments. These write-downs are included in Other expenses in the Consolidated Statements of Operations.