Goodwill and Intangible Assets

6 Months Ended

Jun. 30, 2011

Goodwill and Intangible Assets.

Goodwill and Intangible Assets

12.    Goodwill and Intangible Assets

Refer to Note 1 within the footnotes to the consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010 for a detailed discussion of the accounting policy related to goodwill and intangible assets.

Goodwill

(In thousands of dollars)	Reporting Unit MBS/ABS &Rates		Reporting Unit Equities			Reporting Unit Investment Banking		Total
Goodwill
Balance at December 31, 2010	$	17,364	$	8,928		$	79,402	$	105,694
Impairment of goodwill	—		(8,928		)	—		(8,928		)
Balance at June 30, 2011	$	17,364	$	—		$	79,402	$	96,766

In connection with the preparation of the unaudited consolidated financial statements contained herein the Company performed an interim goodwill impairment test related to the Equities reporting unit as a result of the impact of the current market environment on the segment’s net revenues coupled with the higher operating costs associated with the expansion of our equities trading and sales trading capabilities announced in the third quarter of 2010.  These factors resulted in a shortfall of actual revenues and operating results in relation to current year projections.  The outcome of this interim goodwill impairment test, which relies on significant unobservable inputs to determine the goodwill’s fair value, resulted in all of the goodwill allocated to the Equities reporting unit being written off during the three-months ended June 30, 2011.

During the six months ended June 30, 2011, there was no contingent consideration associated with the Company’s AmTech acquisition as a result of the performance of the division.  Refer to Note 16 herein for additional information.

The Company has designated its annual goodwill impairment testing dates for its MBS/ABS & Rates and Investment Banking reporting units to be December 31 and June 1, respectively.  The fair value of these reporting units exceeded their carrying amounts.

The Company used a combination of the market and income approaches to determine the fair value of its reporting units.  Key assumptions utilized in the market approach included the use of multiples of earnings before interest and taxes and earnings before interest, taxes, depreciation and amortization based upon available comparable company market data.  The income approach, which is a discounted cash flow analysis, utilized a discount rate which included an estimated cost of debt and cost of equity and capital structure based upon observable market data.

Intangible Assets

(In thousands of dollars)	June 30, 2011			December 31, 2010
Intangible assets (amortizable):
Descap Securities, Inc. – Customer relationships
Gross carrying amount	$	641		$	641
Accumulated amortization	(383		)	(356		)
Net carrying amount	258			285
Corporate Credit - Customer relationships
Gross carrying amount	795			795
Accumulated amortization	(531		)	(451		)
Net carrying amount	264			344
AmTech - Customer relationships
Gross carrying amount	6,960			6,960
Accumulated amortization	(1,614		)	(1,362		)
Impairment of intangible asset	(5,346		)	—
Net carrying amount	—			5,598
AmTech Research – Covenant not to compete
Gross carrying amount	330			330
Accumulated amortization	(293		)	(247		)
Impairment of intangible asset	(37		)	—
Net carrying amount	—			83
Gleacher Partners, Inc. – Trade name
Gross carrying amount	7,300			7,300
Accumulated amortization	(755		)	(573		)
Net carrying amount	6,545			6,727
Gleacher Partners, Inc. – Covenant not to compete
Gross carrying amount	700			700
Accumulated amortization	(483		)	(366		)
Net carrying amount	217			334
Gleacher Partners, Inc. – Customer relationships
Gross carrying amount	6,500			6,500
Accumulated amortization	(5,080		)	(4,306		)
Net carrying amount	1,420			2,194
ClearPoint – Customer relationships
Gross carrying amount	803			—
Accumulated amortization	(50		)	—
Net carrying amount	753			—
Total Intangible assets	$	9,457		$	15,565

In connection with the preparation of the unaudited consolidated financial statements contained herein, the Company evaluated the recoverability of the AmTech intangible assets in connection with the interim goodwill impairment test related to the Equities reporting unit, by comparing the sum of the undiscounted cash flows expected to result from the use and eventual disposition of such assets to their carrying amounts.  The outcome resulted in the write-off of approximately $5.4 million which represented the remaining carrying amount of these intangible assets as of the impairment test date.

Customer related intangible assets are being amortized from 3 to 12 years; covenant not to compete assets are being amortized over 3 years; trademark assets are being amortized from 1 to 20 years.  Excluding the AmTech impairment above, total amortization expense recorded within Other in the Consolidated Statements of Operations for the three months ended June 30, 2011 and 2010 was approximately $0.7 million and $1.0 million, respectively, and for the six months ended June 30, 2011 and 2010 was approximately $1.5 million and $2.0 million, respectively.

Future amortization expense as of June 30, 2011 is estimated as follows:

(In thousands of dollars)
2011 (remaining)	$	1,230
2012	1,423
2013	545
2014	519
2015	519
2016	483
Thereafter	4,738
Total	$	9,457