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Goodwill and Intangible Assets
9 Months Ended
Sep. 30, 2012
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 contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011, for a detailed discussion of the accounting policy related to goodwill and intangible assets.

 

Goodwill

 

During the second quarter of 2012, the Company performed an interim goodwill impairment test which was triggered as a result of the Company’s market capitalization trading at levels significantly below book value during the three months ended June 30, 2012.  The Company determined that all of its remaining goodwill of approximately $21.1 million had been impaired, due to the duration and severity of the decline in the Company’s stock price in relation to its book value.

 

(In thousands of dollars)

 

Reporting Unit
MBS & Rates

 

Reporting Unit
Investment Banking

 

Total

 

Goodwill

 

 

 

 

 

 

 

Balance at December 31, 2011

 

$

17,364

 

$

3,732

 

$

21,096

 

Increases/(decreases)

 

 

 

 

Balance at March 31, 2012

 

17,364

 

3,732

 

21,096

 

Impairment — June 30, 2012

 

(17,364

)

(3,732

)

(21,096

)

Balance at September 30, 2012

 

$

 

$

 

$

 

 

During the third quarter of 2011, the Company recorded an impairment of $75.7 million of goodwill allocated to the Investment Banking reporting unit.  This was a result of the implementation of the Company’s strategic plan that resulted in a realignment of the core investment banking practice and the termination of 32 investment banking employees and certain administrative positions.

 

In addition, during the three months ended June 30, 2011, the Company performed an interim goodwill impairment test related to its former Equities reporting unit as a result of the impact of the 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 and as a result, all of the goodwill of the former Equities reporting unit (now classified as part of discontinued operations) was written off during the year ended December 31, 2011.  Refer to Note 24 herein for additional information.

 

Intangible Assets

 

(In thousands of dollars)

 

September 30,
2012

 

December 31,
2011

 

Intangible assets (amortizable):

 

 

 

 

 

MBS & Rates — Customer relationships

 

 

 

 

 

Gross carrying amount

 

$

641

 

$

641

 

Accumulated amortization

 

(449

)

(410

)

Net carrying amount

 

192

 

231

 

Credit Products - Customer relationships

 

 

 

 

 

Gross carrying amount

 

795

 

795

 

Accumulated amortization

 

(729

)

(610

)

Net carrying amount

 

66

 

185

 

Investment Banking — Trade name

 

 

 

 

 

Gross carrying amount

 

4,066

 

7,300

 

Accumulated amortization

 

(1,011

)

(874

)

Impairment of intangible asset — September 1, 2011

 

 

(3,234

)

Net carrying amount

 

3,055

 

3,192

 

ClearPoint — Customer relationships

 

 

 

 

 

Gross carrying amount

 

803

 

803

 

Accumulated amortization

 

(176

)

(100

)

Net carrying amount

 

627

 

703

 

Total intangible assets

 

$

3,940

 

$

4,311

 

 

In connection with the previously mentioned goodwill impairment charge taken during the third quarter of 2011, the Company recorded an impairment of intangible assets allocated to the Investment Banking reporting unit of approximately $4.6 million, including an impairment of the trade name of $3.2 million and other miscellaneous intangible assets that were fully written-off.

 

Customer-related intangible assets are being amortized from 3 to 12 years and trademark assets are being amortized over 20 years (with approximately 16 years remaining).  Total amortization expense recorded within Other in the Consolidated Statements of Operations for the three months ended September 30, 2012 and 2011 was approximately $0.1 million and $0.4 million, respectively, and for the nine months ended September 30, 2012 and 2011 was approximately $0.4 million and $1.7 million, respectively.

 

Future amortization expense as of September 30, 2012 is estimated as follows:

 

(In thousands of dollars)

 

 

 

2012 (remaining)

 

$

124

 

2013

 

364

 

2014

 

337

 

2015

 

337

 

2016

 

301

 

Thereafter

 

2,477

 

Total

 

$

3,940