XM Radio 2008 Annual Report Download - page 70

The table below summarizes the fair value of the XM Holdings assets acquired, liabilities assumed and related
deferred income taxes as of the acquisition date.
July 31, 2008
Acquired assets:
Current assets ...................................................... $ 1,078,148
Property and equipment . .............................................. 912,638
Non-amortizable intangible assets........................................ 2,250,000
Amortizable intangible assets ........................................... 474,460
Goodwill .......................................................... 6,601,046
Other assets ........................................................ 326,948
Total assets ...................................................... $11,643,240
Assumed liabilities:
Current liabilities .................................................... 789,001
Total debt ......................................................... 2,576,512
Deferred income taxes . . .............................................. 847,616
Other non-current liabilities and deferred credit on executory contracts ............ 1,593,748
Total liabilities .................................................... $ 5,806,877
Total consideration . . . .............................................. $ 5,836,363
During the third quarter of 2008, we recorded a preliminary estimate of goodwill in the amount of $6,626,504,
which was adjusted to $6,601,046 during the fourth quarter of 2008 upon finalization of the fair value of acquired
assets and assumed liabilities in the Merger. During the three months ended December 31, 2008, we recognized an
incremental $15,331 of impairment of goodwill as an adjustment to the $4,750,859 goodwill impairment loss
recognized in the third quarter of 2008, which was based on our preliminary purchase price allocations (see Note 5,
Goodwill).
In connection with the Merger, $2,250,000 of the purchase price was allocated to certain indefinite lived
intangible assets of XM Holdings, including $2,000,000 associated with XM Holdings’ FCC license and $250,000
associated with trademarks. During the year ended December 31, 2008, no impairment loss was recorded for
intangible assets with indefinite lives.
In connection with the Merger, $474,460 of the purchase price was allocated to certain finite-lived intangible
assets of XM Holdings which are subject to straight-line amortization, except for the subscriber relationships which
are amortized on an accelerated basis. Acquired finite-lived intangible assets included $33,000 associated with a
licensing agreement with a manufacturer, $42,000 associated with a licensing agreement with XM Canada,
$380,000 associated with subscriber relationships, $16,552 associated with proprietary software, $2,000 associated
with developed technology and $908 associated with leasehold interests. During the year ended December 31, 2008,
we recorded amortization expense of $35,789.
In connection with the Merger, we identified $74,473 of costs associated with reductions in staffing levels and
consolidations, which was comprised of $66,515 in severance and related benefits and $7,958 in lease and other
contract termination costs. During 2008, we paid $38,676 in severance and related benefits and the remaining
severance and related benefits are expected to be paid by the end of 2009. These costs were recognized in
accordance with the EITF No. 95-3, Recognition of Liabilities in Connection with a Purchase Business Combi-
nation, as assumed liabilities in the business combination. As of December 31, 2008, the balance of this liability was
$35,797.
F-20
SIRIUS XM RADIO INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)