Enom 2012 Annual Report Download - page 97

F-14
life by performing an analysis of expected cash flows based on historical experience of the acquired businesses. Intangible
assets are amortized over their estimated useful lives using the straight line method which approximates the pattern in which
the economic benefits are consumed.
Long-lived Assets
The Company evaluates the recoverability of its long-lived assets with finite useful lives for impairment when events
or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. Such trigger events or
changes in circumstances may include: a significant decrease in the market price of a long-lived asset, a significant adverse
change in the extent or manner in which a long-lived asset is being used, significant adverse change in legal factors or in the
business climate, including those resulting from technology advancements in the industry, the impact of competition or other
factors that could affect the value of a long-lived asset, a significant adverse deterioration in the amount of revenue or cash
flows we expect to generate from an asset group, an accumulation of costs significantly in excess of the amount originally
expected for the acquisition or development of a long-lived asset, current or future operating or cash flow losses that
demonstrate continuing losses associated with the use of a long-lived asset, or a current expectation that, more likely than not, a
long-lived asset will be sold or otherwise disposed of significantly before the end of its previously estimated useful life. The
Company performs impairment testing at the asset group level that represents the lowest level for which identifiable cash flows
are largely independent of the cash flows of other assets and liabilities. If events or changes in circumstances indicate that the
carrying amount of an asset group may not be recoverable and the expected undiscounted future cash flows attributable to the
asset group are less than the carrying amount of the asset group, an impairment loss equal to the excess of the asset’s carrying
value over its fair value is recorded. Fair value is determined based upon estimated discounted future cash flows. Through
December 31, 2012, the Company has identified no such impairment loss. Assets to be disposed of would be separately
presented on the balance sheets and reported at the lower of their carrying amount or fair value less costs to sell, and would no
longer be depreciated or amortized.
Google, the largest provider of search engine referrals to the majority of the Company's websites, regularly deploys
changes to its search engine algorithms, some of which have led the Company to experience fluctuations in the total number of
Google search referrals to its owned and operated and network of customer websites. In 2011, the overall impact of these
changes on the Company's owned and operated websites was negative primarily due to a decline in traffic to eHow.com, the
Company's largest website. During 2011 and 2012, and in response to the changes in search engine algorithms in 2011, the
Company performed an evaluation of its existing content library to identify potential improvements in its content creation and
distribution platform. As a result of this evaluation, the Company elected to remove certain content assets from service,
resulting in $5,898 of accelerated amortization expense in 2011 and $2,055 in 2012. Any further discretionary actions may
result in additional accelerated amortization in the periods the actions occur.
We intend to evolve and continuously improve our content creation and distribution platform, by creating new content
formats to meet rapidly changing consumer demand. Such changes may include increasing our investment in short-form
articles on our owned and operated sites including eHow.com, growth in content published on our network of customer
websites and creation of new content formats, including paid content, designed to further diversify our content offering.
There can be no assurance that these changes or any future changes that may be implemented by the Company, by
search engines to their algorithms and search methodologies, or by consumers in their web usage habits might not adversely
impact the carrying value, estimated useful life or intended use of our long-lived assets. The Company will continue to monitor
these changes as well as any future changes and emerging trends in search engine algorithms and methodologies, including the
resulting impact that these changes may have on future operating results, the economic performance of the Company's long-
lived assets and in its assessment as to whether significant changes in circumstances might provide an indication of potential
impairment of the carrying value of its long-lived assets including its media content and goodwill arising from acquisitions.
Goodwill
Goodwill represents the excess of the cost of an acquired entity over the fair value of the acquired net assets.
Goodwill is tested for impairment annually during the fourth quarter of the Company's fiscal year or when events or
circumstances change that would indicate that goodwill might be impaired. Events or circumstances that could trigger an
impairment review include, but are not limited to, a significant adverse change in legal factors or in the business climate, an
adverse action or assessment by a regulator, unanticipated competition, a loss of key personnel, significant changes in the
manner of our use of the acquired assets or the strategy for our overall business, significant negative industry or economic
trends or significant underperformance relative to expected historical or projected future results of operations.