Western Union 2011 Annual Report Download - page 105

THE WESTERN UNION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The Company capitalizes initial payments for new and renewed agent contracts to the extent recoverable
through future operations or penalties in the case of early termination. The Company’s accounting policy is to
limit the amount of capitalized costs for a given contract to the lesser of the estimated future cash flows from the
contract or the termination fees the Company would receive in the event of early termination of the contract.
The Company develops software that is used in providing services. Software development costs are capitalized
once technological feasibility of the software has been established. Costs incurred prior to establishing
technological feasibility are expensed as incurred. Technological feasibility is established when the Company has
completed all planning and designing activities that are necessary to determine that a product can be produced to
meet its design specifications, including functions, features and technical performance requirements.
Capitalization of costs ceases when the product is available for general use. Software development costs and
purchased software are generally amortized over a term of three to five years.
The following table provides the components of other intangible assets (in millions):
December 31, 2011 December 31, 2010
Weighted-
Average
Amortization
Period
(in years)
Initial
Cost
Net of
Accumulated
Amortization
Initial
Cost
Net of
Accumulated
Amortization
Acquired contracts (a) ................... 10.5 $ 629.5 $ 526.5 $ 256.5 $ 186.8
Capitalized contract costs ................ 6.7 399.1 213.8 350.3 164.6
Purchased or acquired software (a) ......... 3.5 132.2 57.9 113.9 30.7
Developed software ..................... 3.3 65.2 3.1 86.1 13.7
Acquired trademarks .................... 24.5 41.5 31.0 42.3 33.4
Projects in process ...................... 3.0 0.8 0.8 6.1 6.1
Other intangibles (a) .................... 3.8 41.6 14.3 24.0 2.7
Total other intangible assets .............. 8.5 $ 1,309.9 $ 847.4 $ 879.2 $ 438.0
(a) Total other intangible assets includes $299.7 million of identifiable intangible assets related to the
preliminary allocation of purchase price for the TGBP acquisition (see Note 3).
The estimated future aggregate amortization expense for existing other intangible assets as of December 31,
2011 is expected to be $160.6 million in 2012, $131.0 million in 2013, $107.3 million in 2014, $89.1 million in
2015, $70.7 million in 2016 and $288.7 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. The Company did not record any impairment
related to other intangible assets during the years ended December 31, 2011 and 2009, and recorded impairments
of approximately $9 million for the year ended December 31, 2010.
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