XM Radio 2008 Annual Report Download - page 72

(6) Intangible Assets
Intangible assets consisted of the following:
Weighted Average
Useful Lives
Gross
Carrying
Value
Accumulated
Amortization
Net
Carrying
Value
Gross
Carrying
Value
Accumulated
Amortization
Net
Carrying
Value
As of December 31, 2008 As of December 31, 2007
Indefinite life intangible
assets
FCC licenses . . ....... Indefinite $2,083,654 $ — $2,083,654 $83,654 $— $83,654
Trademarks........... Indefinite 250,000 — 250,000 — — —
Definite life intangible
assets
Subscriber relationships . . 9 years $ 380,000 $(29,226) $ 350,774 $ — $— $ —
Proprietary software . . . . 6 years 16,552 (2,285) 14,267 — — —
Developed technology . . . 10 years 2,000 (83) 1,917 — — —
Licensing agreements . . . 9.1 years 75,000 (4,090) 70,910 — — —
Leasehold interest ...... 7.4years 908 (105) 803
Total intangible
assets ........... $2,808,114 $(35,789) $2,772,325 $83,654 $— $83,654
Indefinite Life Intangibles Assets
We have identified our FCC licenses and the XM trademark as indefinite life intangibles after considering the
expected use of the assets, the regulatory and economic environment within which they are being used, and the
effects of obsolescence on their use.
We hold FCC licenses to operate a satellite digital audio radio service and provide ancillary services. SIRIUS’
FCC license for most of its satellites expires in 2010 and the licenses for one of its new satellites expires eight years
after SIRIUS certifies the satellite is operating; XM Holdings’ FCC licenses for its satellites expire on various dates
from 2009 to 2014. Prior to the expirations, we will be required to apply for a renewal of our FCC licenses. We
currently have one such application on file for a license expiring in March 2009. As long as we act within the
requirements and constraints of the regulatory authorities, the renewal and extension of our licenses is reasonably
certain at minimal cost. The FCC licenses authorize us to use the broadcast spectrum, which is a renewable, reusable
resource that does not deplete or exhaust over time.
In connection with the Merger, $250,000 of the purchase price was allocated to the XM trademarks. As of
December 31, 2008, there are no legal, regulatory or contractual limitations associated with the XM trademarks.
We evaluate our indefinite life intangible assets for impairment on an annual basis in accordance with
SFAS No. 142, Goodwill and Other Intangible Assets. During the year ended December 31, 2008, no impairment
loss was recorded for intangible assets with indefinite lives.
Finite-Lived Intangibles Assets
Finite-lived intangibles assets consist primarily of subscriber relationships of $380,000 that were acquired as a
result of the Merger. Subscriber relationships are amortized on an accelerated basis over 9 years, which reflects the
estimated pattern in which the economic benefits will be consumed. Other definite life intangibles include certain
licensing agreements of $75,000, which will be amortized over a weighted average of 9.1 years on a straight-line
basis.
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SIRIUS XM RADIO INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)