Vonage 2008 Annual Report Download - page 74

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V
O
NA
G
EH
O
LDIN
GS CO
RP
.
N
O
TE
S
T
OCO
N
SO
LIDATED FINAN
C
IAL
S
TATEMENT
S
—
(C
ontinued
)
(
In thousands, except per share amounts
)
R
e
l
ate
dd
e
p
rec
i
at
i
on an
d
amort
i
zat
i
on ex
p
ense was
$
32,035, which included asset impairment for network
equipment of
$
747, for hardware of
$
398, for closin
g
ou
t
K
iosk locations of
$
374 and other e
q
ui
p
ment of
$
243, in
2
008, $29,442, which included asset im
p
airment of $94
7
f
or network e
q
ui
p
ment and
$
427 for hardware in 2007 an
d
$21,456 in 2006. Included in de
p
reciation and amor-
t
ization expense for 2008, 2007 and 2006 was
$
2,199
,
$
2,368 and
$
2,304 related to capital leases, respectively.
N
ote 4
.
I
ntan
gibl
e
A
sset
s
D
ecember 31,
2008 2007
Patents for compression of packetized digital signal
$
5,268
$
5,26
8
License to use
S
print’s portfolio of Voice over Packet patents 5,500 5,50
0
T
ra
d
emar
k
5
60
–
1
1
,
328 10
,
76
8
L
ess: accumu
l
ate
d
amort
i
zat
i
on
(
5,928
)(
3,112
)
N
et
i
ntang
ibl
e assets
$
5
,
400
$
7
,
656
P
a
t
e
nt
s
In June 2006, we purchased three patents related t
o
t
he compression o
f
packetized digital signals commonly
used in VoIP technolo
g
y at a cost of $5,268. In July 2006,
we be
g
an amortizin
g
the cost o
f
these patents over thei
r
estimated use
f
ul lives o
f
2.7 years. Amortization expens
e
was $1,938 for the years ended December 31, 2008 and
2
007, and $968 for 2006, respectivel
y
. Amortization for
2
009 will be
$
424.
In October 2007, in connection with the settlement of
our patent litigation with Sprint, we acquired a license to
use
Sp
rint’s
p
ortfolio of “Voice over Packet”
p
atents. The
fair value assi
g
ned to these patents was $5,500. We
began amortizing the cost of these patents in October
2007 over their patent lives of 6.6
y
ears. Amortizatio
n
expense was
$
825 and
$
206 for the
y
ear ended
December 31, 2008 and 2007, respectively. Annual amor-
t
ization will be approximately $825
.
Tr
ade
m
a
r
k
I
nA
p
ril 2008, in connection with the settlement o
fa
t
ra
d
emar
kdi
spute, we acqu
i
re
d
t
h
er
igh
t to use t
h
e
t
rademark in question. The
f
air value assi
g
ned to the
t
rademark was
$
560. This trademark is being amortized
over its remainin
g
life of 8 years. Amortization expense
was $52 for the
y
ear ended December 31, 2008. Annual
amortization will be approximately
$
70.
No
t
e5.
A
ccrue
dE
x
p
enses
D
ecember 31
,
2008 2007
M
ar
k
et
i
ng
$
14
,
482
$
13
,
85
8
C
ompensation and related taxes and temporar
y
labor 14,776 18,16
4
T
e
l
ecommun
i
cat
i
on
s
1
0
,
614 12
,
481
Professional fee
s
3
,
439 3
,
13
6
Li
t
i
gat
i
on 5
,
343 6
,
688
T
axes and fee
s
1
4
,
313 18
,
33
7
C
ustomer credits 2
,
172 2
,
458
I
nventor
y
8
74 4
,
60
0
C
redit card fees
5
49 32
3
A
ccrue
di
nteres
t
3
,
350 1
,
12
0
O
ther accrual
s
3
,
570 3
,
19
5
$
73
,
482
$
84
,
360
F
-
14
V
O
NA
G
E ANN
U
AL REP
O
RT 200
8