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Table of Contents
EARTHLINK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Because indicators of impairment existed for this reporting unit, the Company performed the second step of the test. The implied fair value of
goodwill was determined in the same manner as utilized to estimate the amount of goodwill recognized in a business combination. To determine
the implied value of goodwill, fair values were allocated to the assets and liabilities of the New Edge reporting unit. The implied fair value of
goodwill was measured as the excess of the fair value of the New Edge reporting unit over the amounts assigned to its assets and liabilities. The
impairment losses of $64.0 million and $23.9 million during the years ended December 31, 2008 and 2009, respectively, were measured as the
amount the carrying value of goodwill exceeded the implied fair value of the goodwill. The Company did not record any impairment charges for
goodwill during the year ended December 31, 2010.
Indefinite-lived intangible assets. The impairment test for the Company's indefinite-
lived intangible assets, which consist of trade names,
involves a comparison of the estimated fair value of the intangible asset with its carrying value. The Company determined the fair values of its
trade names using the royalty savings method, in which the fair value of the asset was calculated based on the present value of the royalty stream
that we are saving by owning the asset. Given the economic environment and other factors noted above, the Company decreased its estimates for
revenues associated with its New Edge trade name. As a result, the Company recorded non-
cash impairment charges of $3.1 million and
$0.2 million during the years ended December 31, 2008 and 2009, respectively, related to its New Edge trade name.
In November 2010, the Company decided to re-brand the New Edge name as EarthLink Business. The Company recorded a non-
cash
impairment charge of $1.7 million during the year ended December 31, 2010 to write-
down its New Edge trade name. As a result, there is no
remaining carrying value related to the New Edge trade name.
Definite-lived intangible assets. As a result of the goodwill and indefinite-
lived asset impairments in the New Edge reporting unit, the
Company also tested this reporting unit's definite-
lived intangible assets for impairment. Because of the decrease in expected future cash from
such definite-lived intangible assets, the Company concluded certain customer relationships were not fully recoverable and recorded a non-
cash
impairment charge of $11.6 million during the year ended December 31, 2008. The Company did not record any impairment charges for its
definite-lived intangible assets during the years ended December 31, 2009 and 2010.
9. Other Accrued Liabilities
Other accrued liabilities consisted of the following as of December 31, 2009 and 2010:
109
As of December 31,
2009
2010
(in thousands)
Accrued communications costs
$
4,621
$
14,845
Accrued taxes and surcharges
3,413
18,117
Accrued interest
2,507
11,683
Accrued professional fees and settlements
6,073
2,576
Facility exit and restructuring liabilities
5,643
4,749
Deposits and due to customers
1,619
4,651
Other
10,783
19,008
$
34,659
$
75,629