First Data 2008 Annual Report Download - page 119

FIRST DATA CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The following table provides the components of other intangibles (in millions):
Successor
As of December 31,
2008
Cost
2008
Accumulated
Amortization
2008
Net of
Accumulated
Amortization
2007
Cost
2007
Accumulated
Amortization
2007
Net of
Accumulated
Amortization
Customer relationships $ 6,919.7 $ (932.1) $ 5,987.6 $ 7,016.0 $ (230.5) $ 6,785.5
Other intangibles:
Conversion costs $ 31.9 $ (10.0) $ 21.9 $ 5.1 $ (0.4) $ 4.7
Contract costs 96.8 (5.8) 91.0 54.3 (7.1) 47.2
Software 1,141.6 (318.5) 823.1 1,029.4 (58.8) 970.6
Other 1,018.4 (38.8) 979.6 726.2 (10.6) 715.6
Total other intangibles $ 2,288.7 $ (373.1) $ 1,915.6 $ 1,815.0 $ (76.9) $ 1,738.1
The estimated future aggregate amortization expense for existing customer relationships and other intangibles as of December 31, 2008 is $1,041.3
million in 2009, $951.8 million in 2010, $807.5 million in 2011, $721.6 million in 2012, and $577.8 million in 2013.
The Company tests contract and conversion costs greater than $1 million for recoverability on an annual basis by comparing the remaining expected
undiscounted cash flows under the contract to the net book value. Any assets that are determined to be unrecoverable are written down to their fair value. In
addition to this annual test, these assets and all other long lived assets are tested for impairment upon an indicator of potential impairment.
Inventory
Inventories are stated at lower of cost or market and consist primarily of POS terminals, forms and envelopes. The cost of inventory is determined using
average cost for POS terminals and first-in first-out ("FIFO") for forms. In connection with the allocation of the purchase price related to the merger,
inventories were carried forward at historical balances as the best estimate of fair value.
Investment Securities
The Company's current settlement assets represent short-term, liquid investments, which are primarily comprised of discounted commercial paper, time
deposits, money market funds, certificates of deposit and corporate bonds. The Company's long-term settlement assets are comprised of state and municipal
government obligations and corporate bonds. Additionally, the Company maintains other investments carried at fair value and included in the "Other current
assets" and "Other long-term assets" line items of the Consolidated Balance Sheets which include equity securities and shares of a money market fund. The
specific identification method is used to determine the cost basis of securities sold. At December 31, 2008 and 2007, all of the above noted investments were
classified as available-for-sale. Unrealized gains and losses on these investments are included as a separate component of OCI, net of any related tax effect.
The Company also has investments in non-marketable equity securities for strategic purposes, which are included in "Other long-term assets" in the
Company's Consolidated Balance Sheets and are carried at the allocated fair value as a result of the purchase price allocation related to the merger.
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