Dollar Rent A Car 2009 Annual Report Download - page 65

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8. INTANGIBLE ASSETS
2009 2008
Amortized intangible assets
Software 82,227$ 78,663$
Less accumulated amortization (56,156) (48,885)
Total intangible assets 26,071$ 29,778$
December 31,
(In Thousands)
Intangible assets with finite useful lives are amortized over their respective useful lives. The
aggregate amortization expense recognized for intangible assets subject to amortization was $8.0
million, $7.4 million and $6.4 million for the years ended December 31, 2009, 2008 and 2007,
respectively. The estimated aggregate amortization expense for assets existing at December 31,
2009 for each of the next five years is as follows: $7.0 million, $6.2 million, $5.0 million, $3.1 million
and $1.7 million.
During 2009, the Company wrote off $1.0 million (pre-tax) of software no longer in use or considered
impaired ($0.6 million after-tax).
Historically, when the Company acquired locations from franchisees, it established unamortized
separately identifiable intangible assets, 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
impairment.
In March 2008, based on the operating environment and in conjunction with reassessment of
goodwill impairment (see discussion in Note 9 below), the Company reassessed its reacquired
franchise rights for impairment. Impairment testing under ASC Topic 350, “Intangibles – Goodwill
and Other” (“ASC Topic 350”) also applies to reacquired franchise rights. Based on the assessment
at March 31, 2008, management concluded that reacquired franchise rights were impaired, and the
Company recorded a $69.0 million non-cash charge (pre-tax) related to the impairment of the entire
reacquired franchise rights ($48.5 million after-tax). Additionally, in December 2008, the Company
wrote off $10.7 million (pre-tax) of software related to the discontinuation of the Kiosk project
announced during the fourth quarter of 2008 and other software no longer in use or considered
impaired ($6.6 million after-tax).
During 2007, the Company wrote off $3.7 million (pre-tax) of software, of which $3.2 million was
made obsolete by the Pros Fleet Management Software and $0.5 million related to software no
longer in use ($2.2 million after-tax).
The $1.0 million, $79.7 million and $3.7 million of impairments in 2009, 2008 and 2007, respectively,
are reflected in the goodwill and long-lived asset impairment line on the consolidated statements of
operations.
9. GOODWILL
Under ASC Topic 350, the Company is required on at least an annual basis to perform a goodwill
impairment assessment, which requires, among other things, a reconciliation of current equity
market capitalization to stockholders’ equity. As a result of the decline in the Company’s stock price
during the first quarter of 2008, the Company’s total stockholders’ equity exceeded its equity market
capitalization including applying a reasonable control premium. The Company was required to place
greater emphasis on the current stock price than on management’s long-range forecast in
performing its impairment assessment. Based on this evaluation, management concluded that the
entire amount of goodwill was impaired and the Company recorded a $281.2 million non-cash
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