Free cash flow is a Non-GAAP measure and is defined as cash flow from operating activities, less capital expenditures and purchases of intangibles. Management believes this Non-GAAP measure provides investors with a more complete understanding of Broadridge's underlying operational results.
These Non-GAAP measures are indicators that management uses to provide additional meaningful comparisons between current results and prior reported results, and as a basis for planning and forecasting for future periods. Accompanying this press release is a reconciliation of Non-GAAP measures presented in this press release to the comparable GAAP measures.
Acquisition Amortization and Other Costs
Acquisition Amortization and Other Costs represent amortization charges associated with intangible asset values as well as other deal costs associated with the Company's acquisitions. Our Non-GAAP results exclude the impact of the costs the Company incurred in connection with acquisitions. The Acquisition Amortization and Other Costs are recorded in our Cost of revenues in the Condensed Consolidated Statements of Earnings for the three and nine months ended March 31, 2013 and 2012, respectively.
Restructuring and Impairment Charges
For the three and nine months ended March 31, 2013, there were $4 million and $8 million, respectively, in pre-tax charges primarily related to restructuring charges as a result of the termination of the outsourcing services contract with Penson. These charges are recorded in our Other segment and Cost of revenues in the Condensed Consolidated Statements of Earnings for the three and nine months ended March 31, 2013.
In fiscal year 2012, Broadridge reviewed its investment in the Penson common stock for impairment during the second and third fiscal quarters. Based on the Company's review, factoring in the level of decline in the fair value of the Penson common stock, management determined that the market value of the Penson common stock would not equal or exceed the cost basis of its investment within a reasonable period of time. After consideration of the severity and duration of this decline in fair value as well as the reasons for the decline in value, the Company recorded, in the Other segment in the Condensed Consolidated Statements of Earnings for the three and nine months ended March 31, 2012, other-than-temporary impairment charges of $1 million and $11 million, respectively, and established a new cost basis for this investment.
In fiscal year 2012, Broadridge and its former wholly owned subsidiary, Ridge Clearing and Outsourcing Solutions, Inc. ("Ridge"), entered into a Restructuring Support Agreement ("RSA") with Penson and certain of its subsidiaries. The RSA provided for proposed transactions related to the restructuring of Penson's outstanding indebtedness, including the five-year subordinated note receivable from Penson in the principal amount of $21 million issued by Penson to Broadridge as part of the consideration in the sale of the Ridge clearing contracts to Penson. As a part of Penson's debt restructuring, Broadridge agreed to cancel this note receivable in exchange for additional shares of Penson's common stock, and the Company recorded a $21 million charge in the Other segment in the Condensed Consolidated Statements of Earnings for the three and nine months ended March 31, 2012, which included accrued interest on the note receivable.
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