ADMINISTAFF, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
from the date of purchase to maturity. Such amortization is included in interest income as an addition to or
deduction from the coupon interest earned on the investments. The Company follows its investment managers’
methods of determining the cost basis in computing realized gains and losses on the sale of its available-for-sale
securities, which includes both the specific identification and average cost methods. Realized gains and losses are
included in other income (expense).
Property and Equipment
Property and equipment are recorded at cost and are depreciated over the estimated useful lives of the
related assets using the straight-line method. The estimated useful lives of property and equipment for purposes of
computing depreciation are as follows:
Buildings and improvements..........................................................................
Computer hardware and software ..................................................................
Software development costs...........................................................................
Furniture and fixtures.....................................................................................
Aircraft...........................................................................................................
5-30 years
1-7 years
3-5 years
5-7 years
20 years
Software development costs relate primarily to the Company’s proprietary professional employer
information system and are accounted for in accordance with Statement of Position (“SOP”) 98-1, Accounting for
the Costs of Computer Software Developed or Obtained for Internal Use.
The Company accounts for software acquired in connection with the 2005 acquisition of HRTools.com in
accordance with SFAS No. 86, Accounting for Costs of Computer Software to be Sold, Leased, or Otherwise
Marketed. This Statement establishes standards of financial accounting and reporting for the costs of computer
software to be sold, leased, or otherwise marketed as a separate product or as part of a product or process, whether
internally developed and produced or purchased.
The Company periodically evaluates its long-lived assets for impairment in accordance with SFAS No. 144,
Accounting for the Impairment or Disposal of Long-Lived Assets. SFAS No. 144 requires that an impairment loss be
recognized for assets to be disposed of or held-for-use when the carrying amount of an asset is deemed to not be
recoverable. If events or circumstances were to indicate that any of the Company’s long-lived assets might be
impaired, the Company would assess recoverability based on the estimated undiscounted future cash flows to be
generated from the applicable asset. In addition, the Company may record an impairment loss to the extent that the
carrying value of the asset exceeded the fair value of the asset. Fair value is generally determined using an estimate
of discounted future net cash flows from operating activities or upon disposal of the asset.
During 2007, the Company embarked on a strategy to redevelop the technological platform for the
HRTools.com software products; as a result, the unamortized software costs were written down to the net realizable
value, resulting in an impairment charge of $1.2 million, which is included in amortization expense in the
Consolidated Statement of Operations.
Goodwill and Other Intangible Assets
The December 2005 acquisition of HRTools.com and associated software applications included certain
identifiable intangible assets and goodwill in the purchase price. The goodwill and intangible assets are subject to
the provisions of SFAS No. 142, “Goodwill and Other Intangible Assets” (“SFAS 142”). In accordance with SFAS
142, goodwill and other intangible assets are tested for impairment on an annual basis or when indicators of
impairment exist, and written down when impaired. As of December 31, 2007, no impairment write downs were
necessary. Furthermore, SFAS 142 requires purchased intangible assets other than goodwill to be amortized over
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