Annual report pursuant to Section 13 and 15(d)

Intangible Assets

v2.4.0.8
Intangible Assets
 12 Months Ended
Dec. 31, 2013
Goodwill and Intangible Assets Disclosure [Abstract]  
Intangible Assets
Intangible Assets

We recorded intangible assets at fair value related to the Merger that were formerly held by XM Satellite Radio Holdings Inc. In November 2013, we recorded intangible assets at fair value as a result of the acquisition of the connected vehicle business of Agero. Our intangible assets include the following:
 
 
 
December 31, 2013
 
December 31, 2012
 
Weighted Average
Useful Lives
 
Gross
Carrying
Value
 
Accumulated
Amortization
 
Net Carrying
Value
 
Gross
Carrying
Value
 
Accumulated
Amortization
 
Net Carrying
Value
Due to the Merger:
 
 
 
 
 
 
 
 
 
 
 
 
 
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

 
(271,372
)
 
108,628

 
380,000

 
(233,317
)
 
146,683

Licensing agreements
9.1 years
 
45,289

 
(19,604
)
 
25,685

 
78,489

 
(44,161
)
 
34,328

Proprietary software
6 years
 
16,552

 
(13,384
)
 
3,168

 
16,552

 
(12,777
)
 
3,775

Developed technology
10 years
 
2,000

 
(1,083
)
 
917

 
2,000

 
(883
)
 
1,117

Leasehold interests
7.4 years
 
132

 
(96
)
 
36

 
132

 
(79
)
 
53

Due to connected vehicle business of Agero:
 
 
 
 
 
 
 
 
 
 
 
 
 
Definite life intangible assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
OEM relationships
15 years
 
$
220,000

 
$
(2,444
)
 
$
217,556

 
$
—

 
$
—

 
$
—

Proprietary software
10 years
 
10,663

 
(245
)
 
10,418

 
—

 
—

 
—

Total intangible assets
 
 
$
3,008,290

 
$
(308,228
)
 
$
2,700,062

 
$
2,810,827

 
$
(291,217
)
 
$
2,519,610



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 satellite licenses
 
Expiration year
SIRIUS FM-1
 
2017
SIRIUS FM-2
 
2017
SIRIUS FM-3
 
2017
SIRIUS FM-5
 
2017
SIRIUS FM-6 (1)
 

XM-1
 
2014
XM-2
 
2014
XM-3
 
2021
XM-4
 
2014
XM-5
 
2018

(1)
The FCC license for our FM-6 satellite will be issued for a period of eight years, beginning on the date we certify to the FCC that the satellite has been successfully placed into orbit and that the operations of the satellite fully conform to the terms and conditions of the space station radio authorization.

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, 2013, 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 the fourth quarter of each year. An assessment is performed at other times if an event occurs or circumstances change that would more likely than not reduce the fair value of the asset below its carrying value. If the carrying value of the intangible assets exceeds its fair value, an impairment loss is recognized. As of the date of our annual assessment for 2013, our qualitative impairment assessment of fair value of our indefinite intangible assets indicated that such assets substantially exceeded their carrying value and therefore was not at risk of impairment.

There were no indicators of impairment, and no impairment loss was recorded for intangible assets with indefinite lives during the years ended December 31, 2013, 2012 and 2011.

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. The fair value of the OEM relationships and proprietary software acquired in November 2013 are being amortized over their estimated weighted average useful lives of 15 and 10 years, respectively.

Amortization expense for all definite life intangible assets was $50,011, $53,620 and $59,050 for the years ended December 31, 2013, 2012 and 2011, respectively. In 2013, we retired $33,200 in gross carrying value of definite life intangible assets related to licensing agreements that were fully amortized.

Expected amortization expense for each of the fiscal years 2014 through 2018 and for periods thereafter is as follows:
Year ending December 31,
  
Amount
2014
  
$
55,016

2015
  
51,700

2016
  
48,545

2017
  
34,882

2018
  
19,463

Thereafter
  
156,802

Total definite life intangible assets, net
  
$
366,408