Thrifty Car Rental 2007 Annual Report Download - page 67

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8. INTANGIBLE ASSETS
2007 2006
Amortized intangible assets
Software and other intangible assets 77,888$ 65,521$
Less accumulated amortization (43,312) (36,997)
34,576 28,524
Unamortized intangible assets
Reacquired franchise rights 69,201 37,636
Total intangible assets 103,777$ 66,160$
December 31,
(In Thousands)
During 2007, the Company wrote off $3.7 million of software, of which $3.2 million was made
obsolete by the new Pros Fleet Management Software and $0.5 million related to software no longer
in use. The $3.7 million is reflected in selling, general and administrative expense on the
consolidated statement of income.
As discussed in Note 4, the Company adopted the provisions of EITF No. 04-1 on January 1, 2005.
In applying the provisions of EITF No. 04-1 to the acquisitions completed subsequent to January 1,
2005, the Company established an unamortized separately identifiable intangible asset, referred to
as reacquired franchise rights. Intangible assets with indefinite useful lives, such as reacquired
franchise rights, are not amortized, but are subject to impairment testing annually, or more
frequently if events and circumstances indicate there may be an impairment. Historically, the
Company has elected to perform the annual impairment test on the indefinite lived intangible assets
during the fourth quarter of each year, unless circumstances arise that require more frequent testing.
However, in 2007, the Company changed this election to the second quarter and performed the
annual impairment test of each reacquired franchise right and concluded no impairment was
indicated. Additionally, in December 2007 based on weak economic conditions and lower than
anticipated operating results, the Company reassessed its reacquired franchise rights for impairment
and concluded as of December 31, 2007, that no impairment existed. The Company intends to
perform its annual impairment test on reacquired franchise rights during the second quarter of each
year, unless circumstances arise that require more frequent testing.
Intangible assets with finite useful lives are amortized over their respective useful lives. The
aggregate amortization expense recognized for the software and other intangible assets subject to
amortization was $6,386,000, $6,410,000 and $6,088,000 for the years ended December 31, 2007,
2006 and 2005, respectively. The estimated aggregate amortization expense for assets existing at
December 31, 2007 for each of the next five years is as follows: $7,700,000, $8,400,000,
$6,700,000, $5,500,000 and $4,300,000.
9. GOODWILL
The Company has elected to perform the annual impairment test on goodwill during the second
quarter of each year, unless circumstances arise that require more frequent testing. During the
second quarter of 2007, the Company completed the annual impairment test of goodwill and
concluded goodwill was not impaired.
In December 2007, the Company’s stock price fell below its book value indicating a triggering event
to reassess goodwill for impairment. The Company performed an updated assessment of goodwill
impairment as of December 31, 2007, including applying a reasonable control premium to the
Company’s market value and a discounted cash flow analysis, and concluded that goodwill was not
impaired. The Company will continue to assess goodwill on a quarterly basis through 2008 to test
for potential impairment.
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