This excerpt taken from the NDAQ 8-K filed Jan 27, 2006.
Accounting for Goodwill and Other Intangible Assets
Statement of Financial Accounting Standard (SFAS) No. 142 Goodwill and Other Intangible Assets requires that goodwill and certain intangible assets be assessed for impairment using fair value measurement techniques and that management perform a detailed review of the carrying value of the Companys tangible and intangible assets. In this process, management is required to make estimates and assumptions in order to determine the fair value of the Companys assets and liabilities and projected future earnings using various valuation techniques. Management uses its best judgment and information available to it at the time to perform this review, as well as the services of an expert valuation specialist when required. Because managements assumptions and estimates are used in the valuation, actual results may differ.
In 2004, the Companys impairment testing indicated impairment in the value of goodwill recorded as a result of the acquisition of Bridge Trading Company (Bridge). In accordance with SFAS No. 142, based on the results of managements analysis, the Company determined that goodwill had been impaired and as a result, the Company recorded a pre-tax charge of $24.8 million. In 2003, the Companys annual impairment testing indicated impairment in the value of technology assets capitalized at the time of the Island acquisition. Based on the results of managements analysis, the Company determined that intangible assets had been impaired and as a result, the Company recorded a pre-tax charge of $21.7 million. In 2002, based on the results of managements assessment and a valuation analysis prepared by an independent specialist, the Company determined that the all goodwill not related to the Bridge transaction had been completely impaired and as a result, the Company recorded a pre-tax goodwill impairment charge of $509.5 million, the remaining carrying value of the goodwill.