Research, Development, and Computer Software Disclosure

9 Months Ended

Sep. 30, 2011

Research, Development, and Computer Software Disclosure

Research Development and Computer Software

5. The Company capitalizes certain costs related to the development of computer software sold by its Hospitality segment. Software development costs incurred prior to establishing technological feasibility are charged to operations and included in research and development costs.  Software development costs incurred after establishing feasibility (as defined within ASC 985-20) are capitalized and amortized on a product-by-product basis when the product is available for general release to customers.  Capitalized software for the three and nine months ended September 30, 2011 was $2 million and $7 million respectively.  Capitalized software for the three and nine months ended September 30, 2010 was $1.2 million and $3.4 million respectively.

Annual amortization, charged to cost of sales when the product is available for general release to customers, is computed using the greater of (a) the straight-line method over the remaining estimated economic life of the product, generally three to five years or (b) the ratio that current gross revenues for a product bear to the total of current and anticipated future gross revenues for that product. Amortization of capitalized software costs for the three and nine months ended September 30, 2011 was $112,000 and $395,000, respectively.  Amortization for the three and nine months ended September 30, 2010 was $171,000 and $598,000, respectively.

The Company acquired identifiable intangible assets in connection with its acquisitions in prior years.  Amortization of identifiable intangible assets for the three and nine months ended September 30, 2011 was $257,000 and $667,000 respectively.  Amortization for the three and nine months ended September 30, 2010 was $234,000 and $703,000, respectively.

The components of identifiable intangible assets are:

	(in thousands)
	September 30,			December 31,
	2011			2010
Software costs	$	19,208		$	12,161
Customer relationships		4,519			4,519
Trademarks (non-amortizable)		2,170			2,750
Other		620			620
		26,517			20,050
Less accumulated amortization		(10,723	)		(9,661	)
	$	15,794		$	10,389

The future amortization of these intangible assets assuming straight-line amortization of capitalized software costs is as follows (in thousands):

2011	$	253
2012		1,962
2013		1,451
2014		1,446
2015		1,446
Thereafter		7,066
	$	13,624

In conjunction with its quarterly financial close process for the second quarter of 2011, the Company reevaluated its indefinite lived intangibles and determined that two of its trade names within its Hospitality segment should no longer be considered to have indefinite lives.  This determination was made after consideration of the Company's planned use of these trade names in future periods.  As such, the Company utilized the royalty method to estimate the fair values of the two specific trade names in question as of June 30, 2011.  As a result of this estimate, the Company recorded an impairment charge of $580,000 during the quarter ended June 30, 2011.  The residual value of the aforementioned trade names will be amortized over their remaining useful lives.