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This excerpt taken from the NDAQ 10-K filed Mar 14, 2005. Nasdaq Japan
During the second quarter of 2002, Nasdaq recognized an other-than-temporary impairment charge on its equity investment in Nasdaq Japan. Nasdaq recognized this impairment as a result of the depressed level of market activity in Japan, combined with the suspension of Nasdaq Japan’s hybrid trading system due to the inability to gain exchange approval of market rules and industry participation. These conditions led management
F-19
Table of ContentsThe Nasdaq Stock Market, Inc.
Notes to Consolidated Financial Statements—(Continued)
to conclude that Nasdaq Japan would not be profitable in the foreseeable future. As a result, Nasdaq Japan’s financial liabilities to Nasdaq were not expected to be repaid and were recognized as a loss. Nasdaq Japan entered into liquidation status in late November 2002 and was completely dissolved by the end of May 2003.
The net impact of the other-than-temporary impairment on Nasdaq’s pre-tax income was $15.2 million. This represented a complete write-down of the investment, outstanding and unfunded loans (an additional $6.0 million was loaned and $7.0 million was committed), foreign exchange translation losses and other receivables, partially offset by a re-valuation of certain variable Nasdaq Japan stock based awards of approximately $7.9 million.
During the second quarter of 2003, Nasdaq reversed $5.0 million of the reserves related to Nasdaq Japan due to favorable contract negotiations and lower legal costs resulting from the complete liquidation of Nasdaq Japan.
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