Earthlink 2009 Annual Report Download - page 91

Table of Contents
EARTHLINK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Purchased Intangible Assets
The following table presents the components of the Company's acquired identifiable intangible assets included in the accompanying
Consolidated Balance Sheets as of December 31, 2008 and 2009:
Amortization of intangible assets in the Consolidated Statements of Operations for the years ended December 31, 2007, 2008 and 2009
represents the amortization of definite-lived intangible assets. The Company's definite-
lived intangible assets primarily consist of subscriber
bases and customer relationships, acquired software and technology, trade names and other assets acquired in conjunction with the purchases of
businesses and subscriber bases from other companies that are not deemed to have indefinite lives. The Company's identifiable indefinite-
lived
intangible assets consist of certain trade names. Definite-lived intangible assets are amortized on a straight-
line basis over their estimated useful
lives, which are generally three to six years for subscriber bases and customer relationships and three years for acquired software and
technology. As of December 31, 2009, the weighted average amortization periods were 4.4 years for subscriber base assets and customer
relationships, 3.0 years for software and technology and 5.0 years for trade names. Based on the current amount of definite-
lived intangible
assets, the Company expects to record amortization expense of approximately $4.1 million, $2.9 million, $1.5 million, $0.8 million and
$0.5 million during the years ending December 31, 2010, 2011, 2012, 2013 and 2014, respectively. Actual amortization expense to be reported
in future periods could differ materially from these estimates as a result of asset acquisitions, changes in useful lives and other relevant factors.
During the year ended December 31, 2009, the Company removed fully amortized intangible assets that had a gross carrying value and
accumulated amortization of $14.6 million.
Impairment of Goodwill and Intangible Assets
During the years ended December 31, 2007, 2008 and 2009, the Company recorded non-
cash impairment charges of $4.3 million,
$78.7 million and $24.1 million, respectively, which are included in impairment of goodwill and intangible assets in the Consolidated Statements
of Operations.
After completing its annual impairment test during the fourth quarter of 2008, the Company concluded that goodwill and certain intangible
assets recorded as a result of its April 2006 acquisition of New Edge were impaired and recorded non-
cash impairment charges related to the
New Edge reporting unit of $64.0 million for goodwill, $3.1 million for the indefinite
-
lived trade name and $11.6 million for customer
relationships. The primary factor contributing to the impairment charge was the recent significant economic downturn. New Edge serves a large
percentage of small and medium-
sized business customers, especially retail businesses, which have been particularly affected by the recent
economic
87
As of December 31, 2008
As of December 31, 2009
Gross
Carrying
Value
Accumulated
Amortization
Net
Carrying
Value
Gross
Carrying
Value
Accumulated
Amortization
Net
Carrying
Value
(in thousands)
Intangible assets subject to
amortization:
Subscriber bases and customer
relationships
$
94,039
$
(77,758
)
$
16,281
$
79,413
$
(70,487
)
$
8,926
Software, technology and other
739
(649
)
90
711
(711
)
—
Trade names
1,521
(304
)
1,217
1,521
(608
)
913
96,299
(78,711
)
17,588
81,645
(71,806
)
9,839
Intangible assets not subject to
amortization:
Trade names
1,964
—
1,964
1,711
—
1,711
$
98,263
$
(78,711
)
$
19,552
$
83,356
$
(71,806
)
$
11,550