Goodwill and Intangible Assets

12 Months Ended

Dec. 31, 2011

NOTE 11 – Goodwill and Intangible Assets

Goodwill impairment is tested at the reporting unit level, which is an operating segment or one level below an operating segment on an annual basis. The goodwill impairment analysis is a two-step test. The first step, used to identify potential impairment, involves comparing each reporting unit's fair value to its carrying value, including goodwill. If the fair value of a reporting unit exceeds its carrying value, applicable goodwill is considered not to be impaired. If the carrying value exceeds fair value, there is an indication of impairment and the second step is performed to measure the amount of impairment. Our annual goodwill impairment testing was completed as of July 31, 2011, with no impairment identified.

The carrying amount of goodwill and intangible assets attributable to each of our reporting segments is presented in the following table (in thousands):


	December 31, 2010		Net additions		Impairment losses		December 31, 2011
Goodwill
Global Wealth Management	$	128,524	$	15,304	$	—	$	143,828
Institutional Group		173,395		41,765		—		215,160
	$	301,919	$	57,069	$	—	$	358,988


	December 31, 2010		Net additions		Amortization			December 31, 2011
Intangible assets
Global Wealth Management	$	21,463	$	192	$	(2,836	)	$	18,819
Institutional Group		13,132		4,387		(2,475	)		15,044
	$	34,595	$	4,579	$	(5,311	)	$	33,863

The additions to goodwill and intangible assets during the year ended December 31, 2011 are primarily attributable to the acquisition of Stone & Youngberg. Additionally, the adjustments recorded to goodwill of $7.6 million were primarily related to pre-acquisition contingencies of TWPG based on facts that existed as of the acquisition date that would have affected our estimate of the acquisition date fair value.

The allocation of the purchase price of Stone & Youngberg is preliminary and will be finalized upon completion of the analysis of the fair values of the net assets of Stone & Youngberg on October 1, 2011 and the identified intangible assets. The final goodwill and intangible assets recorded on the consolidated statement of financial condition may differ from that reflected herein as a result of future measurement period adjustments. We have preliminarily identified $5.0 million of intangible assets related to the acquisition of Stone & Youngberg, consisting of customer relationships ($3.1 million), trade name ($1.5 million) and investment banking backlog ($0.4 million). The customer relationships and trade name will be amortized over a weighted average life of 15 years and 3 years, respectively. The investment banking backlog will be amortized over its estimated life, which we expect to be within the next 12 months. See Note 3 for additional information regarding our acquisition of Stone & Youngberg.

Amortizable intangible assets consist of acquired customer relationships, trade name, non-compete agreements, and investment banking backlog that are amortized over their contractual or determined useful lives. Intangible assets subject to amortization as of December 31, 2011 and 2010 were as follows (in thousands):



	December 31, 2011				December 31, 2010
	Gross carrying value		Accumulated Amortization		Gross carrying value		Accumulated Amortization

Customer relationships	$	40,166	$	14,827	$	37,068	$	11,015
Trade name		9,442		1,011		7,981		364
Non-compete agreement		2,441		2,441		2,441		2,238
Investment banking backlog		2,250		2,157		2,230		1,508
	$	54,299	$	20,436	$	49,720	$	15,125

Amortization expense related to intangible assets was $5.3 million, $5.5 million, and $2.8 million for the years ended December 31, 2011, 2010, and 2009, respectively.

The weighted-average remaining lives of the following intangible assets at December 31, 2011 are: customer relationships, 7.1 years; and trade name, 8.3 years. The investment banking backlog will be amortized over their estimated lives, which we expect to be within the next 12 months. As of December 31, 2011, we expect amortization expense in future periods to be as follows (in thousands):


Fiscal year
2012	$	4,672
2013		4,150
2014		3,731
2015		3,034
2016		2,761
Thereafter		15,515
	$	33,863

- 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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