America Online 2009 Annual Report Download - page 84

Table of Contents
would have exceeded fair value by approximately $70 million. If the book value of AOL had been greater than fair value, the second step of the goodwill
impairment test would have been required to be performed to determine the implied fair value of goodwill, and would likely have resulted in a significant
goodwill impairment charge.
In connection with the annual impairment analysis performed during the fourth quarter of 2008, AOL determined that the carrying value of its goodwill
was impaired and, accordingly, recorded a goodwill impairment charge of $2,207.0 million to write goodwill down to its implied fair value.
Intangible Assets
The Company's intangible assets and related accumulated amortization at December 31, 2009 and 2008 consisted of the following (in millions):
December 31, 2009 December 31, 2008
Gross
Accumulated
Amortization (a) Net Gross
Accumulated
Amortization (a) Net
Acquired technology $ 886.2 $ (776.3) $ 109.9 $ 886.2 $ (704.7) $ 181.5
Customer relationships 216.8 (144.5) 72.3 215.1 (99.1) 116.0
Trade names 98.2 (66.7) 31.5 97.0 (39.3) 57.7
Other intangible assets 57.1 (46.1) 11.0 56.8 (42.8) 14.0
Total $ 1,258.3 $ (1,033.6) $ 224.7 $ 1,255.1 $ (885.9) $ 369.2
(a) Amortization of intangible assets is provided generally on a straight-line basis over their respective useful lives, which range from two to seven years.
The Company evaluates the useful lives of its finite-lived intangible assets each reporting period to determine whether events or circumstances warrant
revised estimates of useful lives.
The Company recorded amortization expense of $144.7 million, $166.2 million and $95.9 million for the years ended December 31, 2009, 2008 and
2007, respectively. Based on the amount of intangible assets as of December 31, 2009, the estimated amortization expense for each of the succeeding five
years ending December 31 is as follows (in millions):
2010 (a) $ 148.8
2011 71.4
2012 4.5
Total $ 224.7
(a) Included in the 2010 intangible amortization estimates above is approximately $60.0 million related to certain intangible assets for which the Company
has accelerated the amortization based on its reevaluation of their useful lives.
The amounts above may vary as acquisitions and dispositions occur in the future.
NOTE 4—BUSINESS ACQUISITIONS, DISPOSITIONS AND OTHER SIGNIFICANT TRANSACTIONS
Significant 2008 Acquisitions
AOL completed the following significant acquisitions during 2008:
Bebo, Inc.
On May 14, 2008, the Company completed the acquisition of Bebo, Inc. ("Bebo"), a global social media network, for $859.8 million, net of cash
acquired, of which $852.0 million was paid in cash in May 2008, and $7.8 million of which was paid by the Company in the first quarter of 2009. AOL
recognized $765.8 million of goodwill (which is not deductible for tax purposes) and $86.5 million of intangible assets related to this acquisition.
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