First Data 2011 Annual Report Download - page 74

are amortized using the straight-line method over the estimated useful life of the software, which is generally five years. Software
acquired in connection with business combinations is amortized using the straight-line method over the estimated useful life of the
software which generally ranges from three to 10 years.
In addition to capitalized contract and software development costs, other intangibles include copyrights, patents, purchased
software, trademarks and non-compete agreements acquired in business combinations. Other intangibles, except for the First Data
trade name discussed below, are amortized on a straight-line basis over the length of the contract or benefit period, which generally
ranges from three to 25 years. The intangible amortization expense associated with customer relationships and other intangibles,
including amortization associated with investments in affiliates, was as follows:
Year ended December 31,
(in millions) Amount
2011 $ 1,052.1
2010 1,205.6
2009 1,253.5
The value of the First Data trade name is $603.5 million as of December 31, 2011 and 2010. Upon consideration of many
factors, including the determination that there are no legal, regulatory or contractual provisions that limit the useful life of the First
Data trade name, the Company determined that the First Data trade name had an indefinite useful life. The Company also considered
the effects of obsolescence, demand, competition, other economic factors and ability to maintain and protect the trade name without
significant expenditures. The First Data trade name is expected to contribute directly or indirectly to the future cash flows of the
Company for an indefinite period. As an indefinite lived asset, the First Data trade name is not amortized but is reviewed annually for
impairment until such time as it is determined to have a finite life. The First Data trade name was not impaired as of December 31,
2011 or 2010.
The following table provides the components of other intangibles:
As of December 31,
(in millions)
2011
Cost
2011
Accumulated
Amortization
2011
Net of
Accumulated
Amortization
2010
Cost
2010
Accumulated
Amortization
2010
Net of
Accumulated
Amortization
Customer relationships $ 7,638.1 $ (3,212.7) $ 4,425.4 $ 7,714.2 $ (2,490.5) $ 5,223.7
Other intangibles:
Conversion costs $ 120.9 $ (38.9) $ 82.0 $ 90.2 $ (23.7) $ 66.5
Contract costs 189.9 (88.3) 101.6 139.8 (32.8) 107.0
Software 1,402.4 (933.0) 469.4 1,254.7 (761.5) 493.2
Other, including trade names 1,448.2 (222.0)1,226.2 1,422.1 (157.8)1,264.3
Total other intangibles $ 3,161.4 $ (1,282.2)$ 1,879.2 $ 2,906.8 $ (975.8)$ 1,931.0
The estimated future aggregate amortization expense for the next five years is as follows:
Year ended December 31,
(in millions) Amount
2012 $ 915.2
2013 792.6
2014 698.9
2015 616.7
2016 468.3
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. The Company recorded no impairment charges related to customer
contracts and other intangibles in 2011. The Company did record impairment charges relating to customer contracts and other
intangibles in 2010 and 2009 as described in Note 2 of these Consolidated Financial Statements.
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