Earthlink 2002 Annual Report Download - page 63

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and circumstances indicate the goodwill and other indefinite life intangible assets might be permanently impaired. During the fourth quarter of
2002, the Company completed its annual impairment test which entailed comparing the aggregate market value of the Company's outstanding
securities plus its liabilities to the aggregate carrying value of the Company's assets, including goodwill and other indefinite life intangible
assets. Based on this test, the Company determined its goodwill and other indefinite life intangible assets were not impaired.
The following table presents the components of the Company's acquired indefinite and definite life intangible assets included in the
accompanying Consolidated Balance Sheets as of December 31, 2001 and
F-22
2002. The Company wrote-off approximately $288.6 million in fully amortized intangible assets during the year ended December 31, 2002.
Based on the definite life intangible assets existing at December 31, 2002, the Company expects to record amortization expense associated
with definite life intangible assets of approximately $85.1 million, $24.6 million and $8.7 million during the years ending December 31, 2003,
2004 and 2005, respectively. The amounts may not be the actual amounts of amortization expense recorded in the three succeeding years
because the definite life intangible assets may change as a result of additional acquisitions and impairment evaluations performed in accordance
with SFAS No. 142.
Pro forma disclosure of financial information
For the years ended December 31, 2000 and 2001, goodwill amortization amounted to $13.9 million and $42.3 million, respectively. If
EarthLink had adopted SFAS No. 142 as of January 1, 2000 and
F-23
discontinued amortization of goodwill and other indefinite life intangible assets, the Company's net loss and net loss per share on a pro forma
basis would have been as follows:
As of December 31, 2001
As of December 31, 2002
Gross
Carrying
Amount
Accumulated
Amortization
Net
Book
Value
Gross
Carrying
Amount
Accumulated
Amortization
Net
Book
Value
(in thousands)
Goodwill and other indefinite life intangible assets
associated with the acquisition of OneMain $
126,260
$
(56,115
) $
70,145
$
126,260
$
(56,115
) $
70,145
Goodwill associated with the acquisition of Cidco
6,861
—
6,861
7,281
—
7,281
Goodwill and other indefinite life intangible assets
associated with the acquisition of PeoplePC — — —
42,956
—
42,956
Total goodwill and other indefinite life
intangibles
133,121
(56,115
)
77,006
176,497
(56,115
)
120,382
OneMain customer base
189,521
(80,623
)
108,898
189,521
(144,191
)
45,330
Cidco customer base
11,576
(321
)
11,255
11,576
(4,180
)
7,396
PeoplePC customer base — — —
11,000
(1,528
)
9,472
Spry, Inc. customer base
32,450
(32,450
) — — — —
NETCOM On
-Line Communications Services Inc.
customer base
237,695
(227,346
)
10,349
— — —
Other acquired customer bases
99,147
(43,101
)
56,046
114,201
(58,045
)
56,156
Other definite life intangible assets
1,874
(1,874
)
—
—
—
—
Total customer base and other definite life
intangibles
572,263
(385,715
)
186,548
326,298
(207,944
)
118,354
Total intangible assets $
705,384
$
(441,830
) $
263,554
$
502,795
$
(264,059
) $
238,736
Year Ended December 31,
2000
2001
(in thousands, except per share amounts)