Annual report pursuant to Section 13 and 15(d)

Intangible Assets

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Intangible Assets
12 Months Ended
Dec. 31, 2011
Goodwill and Intangible Assets [Abstract]  
Intangible Assets
(7) Intangible Assets

Intangible assets consisted of the following:

 

 

                                                         
          December 31, 2011     December 31, 2010  
    Weighted Average
Useful Lives
    Gross
Carrying
Value
    Accumulated
Amortization
    Net Carrying
Value
    Gross
Carrying
Value
    Accumulated
Amortization
    Net Carrying
Value
 

Indefinite life intangible assets:

                                                       

FCC licenses

    Indefinite     $ 2,083,654     $     $ 2,083,654     $ 2,083,654     $     $ 2,083,654  

Trademark

    Indefinite       250,000             250,000       250,000             250,000  

Definite life intangible assets:

                                                       

Subscriber relationships

    9 years       380,000       (191,201     188,799       380,000       (144,325     235,675  

Licensing agreements

    9.1 years       78,897       (34,145     44,752       78,897       (24,130     54,767  

Proprietary software

    6 years       16,552       (11,507     5,045       16,552       (9,566     6,986  

Developed technology

    10 years       2,000       (683     1,317       2,000       (483     1,517  

Leasehold interests

    7.4 years       132       (61     71       132       (43     89  
           

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total intangible assets

          $ 2,811,235     $ (237,597   $ 2,573,638     $ 2,811,235     $ (178,547   $ 2,632,688  
           

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Indefinite Life Intangible Assets

We have identified our FCC licenses and the XM trademark as indefinite life intangible assets after considering the expected use of the assets, the regulatory and economic environment within which they are used and the effects of obsolescence on their use.

We hold FCC licenses to operate our satellite digital audio radio service and provide ancillary services. The following table outlines the years in which each of our licenses expires:

 

 

         

FCC license

  Expiration year  

SIRIUS FM-1 satellite

    2017  

SIRIUS FM-2 satellite

    2017  

SIRIUS FM-3 satellite

    2017  

SIRIUS FM-4 satellite(1)

    2017  

SIRIUS FM-5 satellite

    2017  

SIRIUS FM-6 satellite

    (2

XM-1 satellite

    2014  

XM-2 satellite

    2014  

XM-3 satellite

    2013  

XM-4 satellite

    2014  

XM-5 satellite

    2018  

 

(1) In 2010, we retired our FM-4 ground spare satellite. We still maintain the FCC license for this satellite.
(2) We hold an FCC license for our FM-6 satellite, which will expire eight years from when this satellite is launched and placed into operation.

 

Prior to expiration, we are required to apply for a renewal of our FCC licenses. The renewal and extension of our licenses is reasonably certain at minimal cost, which is expensed as incurred. Each of the FCC licenses authorizes 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 trademark. As of December 31, 2011, there were no legal, regulatory or contractual limitations associated with the XM trademark.

Our annual impairment assessment of our indefinite intangible assets is performed as of October 1st of each year. An assessment is made at other times if events or changes in circumstances indicate that it is more likely than not that the assets have been impaired. At October 1, 2011 and 2010, the fair value of our indefinite intangible assets substantially exceeded its carrying value and therefore was not at risk of impairment. Subsequent to our annual evaluation of the carrying value of goodwill, there were no events or circumstances that triggered the need for an interim evaluation for impairment.

Definite Life Intangible Assets

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 intangible assets include certain licensing agreements, which are amortized over a weighted average useful life of 9.1 years on a straight-line basis.

Amortization expense for all definite life intangible assets was $59,050, $66,324 and $76,587 for the years ended December 31, 2011, 2010 and 2009, respectively. Expected amortization expense for each of the fiscal years through December 31, 2016 and for periods thereafter is as follows:

 

 

         

Year ending December 31,

  Amount  

2012

  $ 53,680  

2013

    47,357  

2014

    38,879  

2015

    37,553  

2016

    31,959  

Thereafter

    30,556  
   

 

 

 

Total definite life intangibles assets, net

  $ 239,984