NOTE 8 GOODWILL AND OTHER ACQUIRED INTANGIBLE ASSETS
The following table summarizes the activity in goodwill:
| Year Ended December 31,2013 | |||||||||||||||||||||||||||
| MIS | MA | Consolidated | |||||||||||||||||||||||||
| Gross goodwill | Accumulated Impairment charge | Net goodwill | Gross goodwill | Accumulated Impairment charge | Net goodwill | Gross goodwill | Accumulated Impairment charge | Net goodwill | |||||||||||||||||||
| Balance at beginning of year | $ | 11.5 | $ | - | $ | 11.5 | $ | 637.8 | $ | (12.2) | $ | 625.6 | $ | 649.3 | $ | (12.2) | $ | 637.1 | |||||||||
| Additions/adjustments | - | - | - | 34.5 | - | 34.5 | 34.5 | - | 34.5 | ||||||||||||||||||
| Foreign currency translation adjustments | (0.1) | - | (0.1) | (6.3) | - | (6.3) | (6.4) | - | (6.4) | ||||||||||||||||||
| - | - | ||||||||||||||||||||||||||
| Ending balance | $ | 11.4 | $ | - | $ | 11.4 | $ | 666.0 | $ | (12.2) | $ | 653.8 | $ | 677.4 | $ | (12.2) | $ | 665.2 | |||||||||
| Year Ended December 31,2012 | |||||||||||||||||||||||||||
| MIS | MA | Consolidated | |||||||||||||||||||||||||
| Gross goodwill | Accumulated Impairment charge | Net goodwill | Gross goodwill | Accumulated Impairment charge | Net goodwill | Gross goodwill | Accumulated Impairment charge | Net goodwill | |||||||||||||||||||
| Balance at beginning of year | $ | 11.0 | $ | - | $ | 11.0 | $ | 631.9 | $ | $ | 631.9 | $ | 642.9 | $ | - | $ | 642.9 | ||||||||||
| Additions/adjustments | - | - | - | (4.4) | (4.4) | (4.4) | - | (4.4) | |||||||||||||||||||
| Impairment charge | - | - | - | - | (12.2) | (12.2) | - | (12.2) | (12.2) | ||||||||||||||||||
| Foreign currency translation adjustments | 0.5 | - | 0.5 | 10.3 | 10.3 | 10.8 | - | 10.8 | |||||||||||||||||||
| Ending balance | $ | 11.5 | $ | - | $ | 11.5 | $ | 637.8 | $ | (12.2) | $ | 625.6 | $ | 649.3 | $ | (12.2) | $ | 637.1 | |||||||||
The 2013 additions for the MA segment relate to the acquisition of Amba in the fourth quarter of 2013. The 2012 additions/adjustments for the MA segment relate to the acquisitions of Copal and B&H in the fourth quarter of 2011, more fully discussed in Note 7.
The impairment charge in the table above relates to goodwill in the FSTC reporting unit within MA. The Company evaluates its goodwill for potential impairment annually on July 31 or more frequently if impairment indicators arise throughout the year. Projected operating results for the FSTC reporting unit at December 31, 2012 were lower than projections utilized for the annual impairment analysis performed at July 31, 2012 reflecting a contraction in spending for training and certification services at the time for many individuals and global financial institutions amidst macroeconomic uncertainties in the prior year. Based on this trend and overall macroeconomic uncertainties at the time, the Company lowered its cash flow forecasts for this reporting unit in the fourth quarter of 2012. Accordingly, the Company performed another goodwill impairment assessment as of December 31, 2012 which resulted in an impairment charge of $12.2 million. The fair value of the FSTC reporting unit utilized in the impairment assessment was estimated using a discounted cash flow methodology and comparable public company and precedent transaction multiples. There was no goodwill impairment in 2013.
Acquired intangible assets consisted of:
| December 31, | |||||||
| 2013 | 2012 | ||||||
| Customer relationships | $ | 237.4 | $ | 219.6 | |||
| Accumulated amortization | (86.6) | (74.0) | |||||
| Net customer relationships | 150.8 | 145.6 | |||||
| Trade secrets | 31.1 | 31.4 | |||||
| Accumulated amortization | (18.5) | (16.0) | |||||
| Net trade secrets | 12.6 | - | 15.4 | ||||
| Software | 71.0 | 73.2 | |||||
| Accumulated amortization | (38.8) | (33.7) | |||||
| Net software | 32.2 | - | 39.5 | ||||
| Trade names | 31.3 | 28.3 | |||||
| Accumulated amortization | (11.7) | (10.3) | |||||
| Net trade names | 19.6 | - | 18.0 | ||||
| Other | 26.1 | 24.9 | |||||
| Accumulated amortization | (19.7) | (16.9) | |||||
| Net other | 6.4 | - | 8.0 | ||||
| Total | $ | 221.6 | $ | 226.5 | |||
Other intangible assets primarily consist of databases and covenants not to compete. Amortization expense relating to intangible assets is as follows:
| Year Ended December 31, | ||||||||
| 2013 | 2012 | 2011 | ||||||
| Amortization expense | $ | 28.0 | $ | 30.1 | $ | 20.5 | ||
Estimated future annual amortization expense for intangible assets subject to amortization is as follows:
| Year Ended December 31, | |||
| 2014 | $25.9 | ||
| 2015 | 24.3 | ||
| 2016 | 23.7 | ||
| 2017 | 21.0 | ||
| 2018 | 16.0 | ||
| Thereafter | 110.7 |
Amortizable intangible assets are reviewed for recoverability whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. In conjunction with the assessment of goodwill impairment at July 31, 2012, the Company reviewed the recoverability of certain customer lists within its FSTC reporting unit. This review resulted in an impairment of approximately $1 million in the third quarter of 2012 which is recorded in depreciation and amortization expense in the consolidated statement of operations. The fair value of these customer lists was determined using a discounted cash flow analysis. The Company again reviewed the recoverability of these customer lists in the fourth quarter of 2012 in conjunction with the quantitative goodwill impairment test performed at December 31, 2012 for the FSTC reporting unit. Based on this assessment, there was no further impairment of the customer lists in the fourth quarter of 2012. For all intangible assets, there were no such events or changes during 2013 that would indicate that the carrying amount of amortizable intangible assets in any of the Company's reporting units may not be recoverable. This determination was made based on improving market conditions for the reporting unit where the intangible asset resides and an assessment of projected cash flows for all reporting units. Additionally, there were no events or circumstances during 2013 that would indicate the need for an adjustment of the remaining useful lives of these amortizable intangible assets.