Discover 2010 Annual Report Download - page 127

Download and view the complete annual report

Please find page 127 of the 2010 Discover annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 185

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160
  • 161
  • 162
  • 163
  • 164
  • 165
  • 166
  • 167
  • 168
  • 169
  • 170
  • 171
  • 172
  • 173
  • 174
  • 175
  • 176
  • 177
  • 178
  • 179
  • 180
  • 181
  • 182
  • 183
  • 184
  • 185

8. Premises and Equipment
A summary of premises and equipment, net is as follows (dollars in thousands):
November 30,
2010 2009
Land............................................................................................................................................................................. $ 41,816 $ 41,816
Buildings and improvements ............................................................................................................................................. 496,352 494,511
Capitalized equipment leases ........................................................................................................................................... 3,962 7,132
Furniture, fixtures and equipment ...................................................................................................................................... 508,599 490,594
Software ....................................................................................................................................................................... 300,018 276,298
Premises and equipment ............................................................................................................................................... 1,350,747 1,310,351
Less: Accumulated depreciation ........................................................................................................................................ (647,256) (593,295)
Less: Accumulated amortization of software ........................................................................................................................ (248,877) (223,871)
Premises and equipment held for investment, net .............................................................................................................. 454,614 493,185
Premises and equipment held for sale, net(1) ..................................................................................................................... 6,118 6,118
Total premises and equipment, net .............................................................................................................................. $ 460,732 $ 499,303
(1) On November 12, 2009, the Company announced plans to close one of its processing centers. As such, this property was classified as held for sale, and the Company recorded a loss in 2009 of
$5.6 million, which is included in other expense in the consolidated statement of income. The property was still classified as held for sale at November 30, 2010.
Depreciation expense, including amortization of assets recorded under capital leases, was $64.0 million, $72.7 million
and $75.8 million for the years ended November 30, 2010, 2009 and 2008, respectively. This includes depreciation
expense associated with held-for-sale property of $0.8 million for the years ended November 30, 2009 and 2008.
Amortization expense on capitalized software was $25.2 million, $24.9 million and $24.7 million for the years ended
November 30, 2010, 2009 and 2008, respectively.
9. Goodwill and Intangible Assets
Goodwill
As of November 30, 2010 and 2009, the Company had goodwill of $255.4 million recorded in connection with its
acquisition of PULSE in January 2005, which was allocated to the Payment Services segment. Subsequent to the
acquisition date, no adjustments have been made to the Company’s goodwill balance. The Company conducted its
annual goodwill impairment testing on June 1, 2010 and 2009, at which times management concluded that goodwill
was not impaired.
Intangible Assets
The Company’s amortizable intangible assets consist primarily of acquired customer relationships and trade name
intangibles recognized in the acquisition of PULSE in January 2005, and its non-amortizable intangible assets consist of
international transaction processing rights and trade name intangibles recognized in the acquisition of Diners Club in
June 2008. Acquired customer relationships consist of those relationships in existence between PULSE and the numerous
financial institutions that participate in its network, as valued at the date of the Company’s acquisition of PULSE.
-116-