Question-and-Answer Session
Operator
(Operator Instructions) And we’ll go first to Scott Sutherland from Wedbush Morgan. Your line is open.
Analyst for Scott Sutherland – Wedbush Morgan Securities
Just a couple questions and then maybe a couple housekeeping questions, can you delve in a little bit further on the Boomerang impairment, not necessarily the accounting piece of this but the way you discussed is that you don’t – if I understand – you don’t expect to retain the same customers or that same level of customers because of this transition and so I was curious as to why that is? Is it a competitive thing or kind of what’s driving that?
Michael Umana
I guess coming back and I’ll frame it around the accounting area and Ron may want to add something as well, but coming back to the acquisition we assigned about $9 million to a combination of intangibles primarily the customer relationships at the acquisition date as well as technology and brand. Through the expected analog to digital conversion we do expect a lower retention now than we would have expected previously for a number of reasons including the age of the vehicles in the market and some other factors that we’re planning on. Frankly we’re hopeful that those plans prove to be conservative but we think it’s nonetheless appropriate. So where we ended up on the charge is basically a $6 million asset that was there at the end of third quarter 2007 we basically have through this charge to a net $3 million at the end of the year.
Analyst for Scott Sutherland – Wedbush Morgan Securities
I guess – I’m sorry, so when you switch from analog to digital you mentioned maybe the age of the vehicles maybe people don’t – is there going to be an up cost and so maybe people with older vehicles don’t want to make that change? Is there other things that there’s already competition in place to where they already have digital so people are switching? I’m just trying to understand why somebody would switch from you if they’re already a customer between the technology migration.
Ronald V. Waters, III
It may not be switched to someone else, there is a new unit that’s necessary that is a digital unit. There is a cost involved with that new unit. We are discounting the cost of those units so as Mike said if an individual has an older car they may no longer have an insurance mandate for example on that old unit so therefore not decide to take the new digital unit.
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