eBay 2008 Annual Report Download - page 99

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of the Skype earn out settlement payment and was determined by comparing the carrying value of goodwill in our
Communications reporting unit with the implied fair value of the goodwill. We determined the fair value of the
Communications reporting unit using the income approach, which requires estimates of future operating results and
cash flows discounted using an estimated discount rate. Our estimates resulted from an updated long-term financial
outlook developed as part of our strategic planning cycle conducted annually during our third quarter. Our estimates
of future operating results for our Communications reporting unit are for an early stage business with limited
financial history, as well as developing revenue models. These factors increase the risk of differences between
projected and actual performance that could impact future estimates of fair value of the Communications reporting
unit.
Intangible Assets
The components of acquired identifiable intangible assets are as follows (in thousands):
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
Weighted
Average Useful
Life
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
Weighted
Average Useful
Life
December 31, 2007 December 31, 2008
(years) (years)
Intangible assets:
Customer lists and user
base............ $ 588,714 $(334,864) $253,850 6 $ 756,829 $(415,238) $341,591 6
Trademarks and trade
names .......... 572,918 (292,854) 280,064 5 638,930 (393,353) 245,577 5
Developed
technologies . . . . . . 125,504 (85,441) 40,063 4 199,893 (111,973) 87,920 3
Allother............ 62,052 (38,546) 23,506 4 126,381 (64,803) 61,578 4
$1,349,188 $(751,705) $597,483 $1,722,033 $(985,367) $736,666
All of our acquired identifiable intangible assets are subject to amortization. Acquired identifiable intangible
assets are comprised of customer lists and user base, trademarks and trade names, developed technologies, and other
acquired intangible assets including patents and contractual agreements. No significant residual value is estimated
for the intangible assets. The increase in intangible assets during the year ended December 31, 2008 resulted
primarily from certain intangible assets acquired as part of our acquisition of the outstanding shares of Bill Me
Later, Den Bla
˚Avis and BilBasen, and Fraud Sciences as well as other acquisitions completed during the year. The
net carrying amount of intangible assets related to our equity investments, included in the table above, totaled
approximately $1.4 million and $0.5 million, as of December 31, 2007 and 2008, respectively. Aggregate
amortization expense for intangible assets totaled $220.0 million, $229.2 million and $281.6 million for the years
ended December 31, 2006, 2007 and 2008, respectively. Included in amortization of intangibles for the year ended
December 31, 2008, is a charge of $9.0 million for in-process research and development related to an asset purchase
completed during the period.
91
eBay Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)