XO Communications 2009 Annual Report Download - page 63

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6. PROPERTY AND EQUIPMENT
Property and equipment consisted of the following as of December 31, (in thousands):
2009 2008
Telecommunications networks and acquired bandwith .............. $1,376,254 $1,211,894
Furniture, fixtures, equipment and other ........................ 410,063 371,561
1,786,317 1,583,455
Less: accumulated depreciation ............................... (1,112,171) (931,607)
674,146 651,848
Construction-in-progress, parts and equipment .................... 75,784 72,556
Property and equipment, net ................................. $ 749,930 $ 724,404
Telecommunications networks and bandwidth include the deployment of fiber optic cable and telecommunica-
tions hardware and software for the delivery of telecommunications services. Depreciation expense for 2009,
2008 and 2007 was $180.1 million, $189.2 million and $197.0 million, respectively. Assets classified as
construction-in-progress are not being depreciated as they have not yet been placed in service. For 2009, 2008
and 2007, certain assets included in parts and equipment were disposed of, resulting in losses of $9.8 million,
$5.6 million and $7.6 million, respectively. Interest costs for the construction of certain long-lived assets are
capitalized. During 2009, 2008 and 2007, the Company capitalized interest on construction costs of $1.7 mil-
lion, $2.4 million and $4.5 million, respectively.
The useful lives of the Company’s fixed assets are determined based on historical usage with consideration
given to technological changes and trends in the industry, which could impact the network architecture and
asset utilization. Accordingly, in making this assessment, the Company considers (i) its planned use of the
assets, (ii) the views of experts within and outside of the Company, (iii) sources regarding the impact of
technological advances and (iv) trends in the industry on the value and useful lives of its network assets. The
Company annually evaluates the estimated useful lives used to depreciate its assets. Revisions to the
depreciable lives associated with certain fixed asset categories resulted in an increase to depreciation expense
of $4.2 million and $13.3 million during 2009 and 2007, respectively. No significant revisions were made as a
result of evaluations made in 2008.
7. INTANGIBLE ASSETS
Intangible assets consisted of the following as of December 31, (in thousands):
2009 2008
Customer relationships ....................................... $112,366 $ 112,366
Internally developed technology ................................ 9,521 9,521
Acquired trade names ........................................ 5,673 5,673
$ 127,560 $ 127,560
Less accumulated amortization ................................. (127,560) (127,560)
——
Broadband wireless licenses — indefinite life asset .................. 27,500 35,782
XO trade name — indefinite life asset ............................ 16,662 16,662
Goodwill — indefinite life asset ................................ 1,071 1,071
$ 45,233 $ 53,515
The Company’s definite lived intangible assets were fully amortized as of June 30, 2007. Amortization
expense related to definite lived intangible assets was $10.0 million for 2007.
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