Western Union 2012 Annual Report Download - page 99

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THE WESTERN UNION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
94
Property and equipment consisted of the following (in millions):
December 31,
2012 2011
Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 384.6 $ 434.8
Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80.0 80.1
Leasehold improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65.6 61.1
Furniture and fixtures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33.4 33.1
Land and improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.9 16.9
Projects in process. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.1 1.8
580.6 627.8
Less accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (384.5)(429.7)
Property and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 196.1 $ 198.1
Amounts charged to expense for depreciation of property and equipment were $61.7 million, $61.0 million and $61.5 million
during the years ended December 31, 2012, 2011 and 2010, respectively.
Goodwill
Goodwill represents the excess of purchase price over the fair value of tangible and other intangible assets acquired, less
liabilities assumed arising from business combinations. The Company's annual impairment assessment did not identify any goodwill
impairment during the years ended December 31, 2012, 2011 and 2010.
Other Intangible Assets
Other intangible assets primarily consist of acquired contracts, contract costs (primarily amounts paid to agents in connection
with establishing and renewing long-term contracts) and software. Other intangible assets are amortized on a straight-line basis
over the length of the contract or benefit periods. Included in the Consolidated Statements of Income is amortization expense of
$184.4 million, $131.6 million and $114.4 million for the years ended December 31, 2012, 2011 and 2010, respectively.
Acquired contracts include customer and contractual relationships and networks of subagents that are recognized in connection
with the Company's acquisitions.
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.