Time Warner Cable 2010 Annual Report Download - page 98

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the future to continue its business, and it is possible that the Company may record an impairment charge on its investment
in Clearwire Communications in the future.
8. INTANGIBLE ASSETS AND GOODWILL
As of December 31, 2010 and 2009, the Company’s intangible assets and related accumulated amortization consisted
of the following (in millions):
Gross
Accumulated
Amortization Net Gross
Accumulated
Amortization Net
December 31, 2010 December 31, 2009
Intangible assets subject to amortization:
Customer relationships
(a)
.............. $ 6 $ (5) $ 1 $ 952 $ (803) $ 149
Cable franchise renewals and access rights . . . 220 (94) 126 202 (83) 119
Other ............................ 42 (37) 5 42 (36) 6
Total
(a)
........................... $ 268 $ (136) $ 132 $ 1,196 $ (922) $ 274
Intangible assets not subject to amortization:
Cable franchise rights ................ $ 25,013 $ (922) $ 24,091 $ 25,014 $ (922) $ 24,092
(a)
The decrease in the gross and accumulated amortization balances for intangible assets subject to amortization was primarily due to customer
relationships acquired in the July 31, 2006 transactions with Adelphia Communications Corporation and Comcast Corporation and the 2007
dissolution of Texas and Kansas City Cable Partners, L.P. that became fully amortized during 2010 and were subsequently written off.
The Company recorded amortization expense of $168 million in 2010, $249 million in 2009 and $262 million in
2008. Based on the remaining carrying value of intangible assets subject to amortization as of December 31, 2010,
amortization expense is expected to be $24 million in 2011, $22 million in 2012, $18 million in 2013, $15 million in 2014
and $12 million in 2015. These amounts may vary as acquisitions and dispositions occur in the future.
Changes in the carrying value of the Company’s goodwill from January 1 through December 31 are presented below
(in millions):
2010 2009
December 31,
Balance at beginning of year ............................................ $ 2,111 $ 2,101
Adjustments and other changes .......................................... (20) 10
Balance at end of year
(a)
............................................... $ 2,091 $ 2,111
(a)
There are no accumulated goodwill impairment charges as of December 31, 2010 and 2009.
Annual Impairment Analysis
Indefinite-lived intangible assets, primarily the Company’s cable franchise rights, and goodwill are tested for
impairment annually or upon the occurrence of a triggering event. The impairment test for intangible assets not subject to
amortization involves a comparison of the estimated fair value of the intangible asset with its carrying value. The
Company determines the fair value of the intangible asset using a DCF analysis, which utilizes significant unobservable
inputs (Level 3) within the fair value hierarchy. The impairment test for goodwill involves a comparison of the estimated
fair value of each of the Company’s six geographic reporting units to its carrying amount, including goodwill. The
Company determines the fair value of a reporting unit using a DCF analysis that is corroborated by a market-based
approach, which utilizes significant unobservable inputs (Level 3) within the fair value hierarchy. Determining fair value
requires the exercise of significant judgment, including judgment about appropriate discount rates, perpetual growth rates
and the amount and timing of future cash flows.
The Company determined that cable franchise rights and goodwill were not impaired during its annual impairment
analyses as of July 1, 2010 and December 31, 2009 respectively. The Company’s 2008 impairment analysis, which was
86
TIME WARNER CABLE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)