Western Union 2009 Annual Report Download - page 100

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The following table provides the components of other intangible assets (in millions):
Weighted-
Average
Amortization
Period
(in years)
Initial
Cost
Net of
Accumulated
Amortization
Initial
Cost
Net of
Accumulated
Amortization
December 31, 2009 December 31, 2008
Capitalized contract costs ................ 6.6 $331.0 $189.7 $316.2 $213.2
Acquired contracts ..................... 11.2 250.0 205.5 78.1 49.4
Purchased or acquired software ............ 3.4 102.7 35.5 74.8 22.2
Developed software . . . ................. 4.3 78.1 11.0 77.1 14.1
Acquired trademarks . . . ................. 24.5 42.7 35.6 43.7 38.2
Projects in process ..................... 3.3 6.0 6.0 8.6 8.6
Other intangibles ...................... 5.9 34.1 5.9 28.6 4.9
Total other intangible assets .............. 8.2 $844.6 $489.2 $627.1 $350.6
The estimated future aggregate amortization expense for existing other intangible assets as of
December 31, 2009 is expected to be $107.6 million in 2010, $89.1 million in 2011, $61.6 million in 2012,
$44.7 million in 2013, $38.1 million in 2014 and $148.1 million thereafter.
Other intangible assets are reviewed for impairment on an annual basis and whenever events indicate that
their carrying amount may not be recoverable. In such reviews, estimated undiscounted cash flows associated
with these assets or operations are compared with their carrying values to determine if a write-down to fair
value (normally measured by the present value technique) is required. Western Union did not record any
impairment related to other intangible assets during the years ended December 31, 2009, 2008 and 2007.
Revenue Recognition
The Company’s revenues are primarily derived from consumer money transfer transaction fees that are
based on the principal amount of the money transfer and the locations from and to which funds are
transferred. The Company also offers several global business payments services, including payments from
consumers or businesses to other businesses. Transaction fees are set by the Company and recorded as revenue
at the time of sale.
In certain consumer money transfer and global business payments transactions involving different
currencies, the Company generates revenue based on the difference between the exchange rate set by the
Company to the customer and the rate at which the Company or its agents are able to acquire currency. This
foreign exchange revenue is recorded at the time the related consumer money transfer transaction fee revenue
is recognized or at the time a customer initiates a transaction through the Company’s cross-border, cross-
currency international business-to-business payment service operations.
The Company’s Equity Accelerator service generally requires a consumer to pay an upfront enrollment
fee to participate in this mortgage payment service. These enrollment fees are deferred and recognized into
income over the length of the customer’s expected participation in the program, generally five to seven years.
Actual customer attrition data is assessed at least annually and the period over which revenue is recognized is
adjusted prospectively. Many factors impact the duration of the expected customer relationship, including
interest rates, refinance activity and trends in consumer behavior.
Cost of Services
Cost of services primarily consists of agent commissions and expenses for call centers, settlement
operations, and related information technology costs. Expenses within these functions include personnel,
86
THE WESTERN UNION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)