Quarterly report pursuant to Section 13 or 15(d)

Intangible Assets

v2.4.0.6
Intangible Assets
 3 Months Ended
Mar. 31, 2012
Goodwill and Intangible Assets Disclosure [Abstract]  
Intangible Assets
Intangible Assets

Intangible assets consisted of the following:
 
 
 
March 31, 2012
 
December 31, 2011
 
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

 
(202,134
)
 
177,866

 
380,000

  
(191,201
)
 
188,799

Licensing agreements
9.1
 years
 
78,897

 
(36,649
)
 
42,248

 
78,897

  
(34,145
)
 
44,752

Proprietary software
6
 years
 
16,552

 
(11,941
)
 
4,611

 
16,552

  
(11,507
)
 
5,045

Developed technology
10
 years
 
2,000

 
(733
)
 
1,267

 
2,000

  
(683
)
 
1,317

Leasehold interests
7.4
 years
 
132

 
(66
)
 
66

 
132

  
(61
)
 
71

Total intangible assets
 
 
$
2,811,235

 
$
(251,523
)
 
$
2,559,712

 
$
2,811,235

  
$
(237,597
)
 
$
2,573,638



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 of our wholly owned subsidiary, Vernon Merger Corporation, with and into XM Satellite Radio Holdings Inc. in July 2008 (the "Merger"), $250,000 of the purchase price was allocated to the XM trademark. As of March 31, 2012, 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 these assets might be impaired. The impairment test consists of a comparison of the fair value of the assets with its carrying value. If the carrying value of the intangible assets exceeds its fair value, an impairment loss is recognized. As of March 31, 2012, there were no indicators of impairment and no impairment loss was recorded for intangible assets with indefinite lives during the three months ended March 31, 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.

Amortization expense for all definite life intangible assets was $13,926 and $15,303 for the three months ended March 31, 2012 and 2011, respectively. Expected amortization expense for the remaining period in 2012, each of the fiscal years 2013 through 2016 and for periods thereafter is as follows:
Year ending December 31,
  
Amount
2012
  
$
39,739

2013
  
47,357

2014
  
38,879

2015
  
37,553

2016
  
31,959

Thereafter
  
30,571

Total definite life intangibles assets, net
  
$
226,058