Iridium Communications Inc. Goodwill & Intangibles Disclosure
8. Intangible Assets
The Company has identifiable intangible assets as follows:
|
|
|
December 31, 2015 |
|
|||||||||||
|
|
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Useful |
|
Gross |
|
|
Accumulated |
|
|
Net |
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|||
|
|
|
Lives |
|
Carrying Value |
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|
Amortization |
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|
Carrying Value |
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|||
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|
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(In thousands) |
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Indefinite life intangible assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade names |
|
Indefinite |
|
$ |
21,195 |
|
|
$ |
— |
|
|
|
21,195 |
|
|
Spectrum and licenses |
|
Indefinite |
|
|
14,030 |
|
|
|
— |
|
|
|
14,030 |
|
|
Total |
|
|
|
|
35,225 |
|
|
|
— |
|
|
|
35,225 |
|
|
Definite life intangible assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intellectual property |
|
19.5 years |
|
|
16,439 |
|
|
|
(5,075 |
) |
|
|
11,364 |
|
|
Total |
|
|
|
|
16,439 |
|
|
|
(5,075 |
) |
|
|
11,364 |
|
|
Total intangible assets |
|
|
|
$ |
51,664 |
|
|
$ |
(5,075 |
) |
|
$ |
46,589 |
|
|
|
|
December 31, 2014 |
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|||||||||||
|
|
|
Useful |
|
Gross |
|
|
Accumulated |
|
|
Net |
|
|||
|
|
|
Lives |
|
Carrying Value |
|
|
Amortization |
|
|
Carrying Value |
|
|||
|
|
|
(In thousands) |
|
|||||||||||
|
Indefinite life intangible assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade names |
|
Indefinite |
|
$ |
21,195 |
|
|
$ |
— |
|
|
$ |
21,195 |
|
|
Spectrum and licenses |
|
Indefinite |
|
|
14,030 |
|
|
|
— |
|
|
|
14,030 |
|
|
Total |
|
|
|
|
35,225 |
|
|
|
— |
|
|
|
35,225 |
|
|
Definite life intangible assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intellectual property |
|
16.5 years |
|
|
16,439 |
|
|
|
(4,248 |
) |
|
|
12,191 |
|
|
Total |
|
|
|
|
16,439 |
|
|
|
(4,248 |
) |
|
|
12,191 |
|
|
Total intangible assets |
|
|
|
$ |
51,664 |
|
|
$ |
(4,248 |
) |
|
$ |
47,416 |
|
We evaluated the useful life of the remaining definite-lived intangible assets in 2015 to reflect the refinement of the Iridium NEXT launch schedule and deployment plan. This resulted in a change in the weighted-average amortization period of intangible assets to 19.5 years for the year ended December 31, 2015 from 16.5 years for the year ended December 31, 2014. Amortization expense was $0.8 million, $10.0 million and $13.0 million for the years ended December 31, 2015, 2014 and 2013, respectively.
Future amortization expense with respect to intangible assets existing at December 31, 2015, by year and in the aggregate, is as follows:
|
Year ending December 31, |
|
Amount |
|
|
|
|
|
(In thousands) |
|
|
|
2016 |
|
$ |
797 |
|
|
2017 |
|
797 |
|
|
|
2018 |
|
797 |
|
|
|
2019 |
|
797 |
|
|
|
2020 |
|
797 |
|
|
|
Thereafter |
|
|
7,379 |
|
|
Total estimated future amortization expense |
|
$ |
11,364 |
|
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About Goodwill & Intangibles Disclosures
Goodwill and intangible asset disclosures reveal the premium paid in acquisitions and how management assesses whether that premium retains its value. Since goodwill is no longer amortized under US GAAP, the annual impairment test is the only mechanism that adjusts carrying values downward — making the assumptions behind that test critically important for investors.
Key signals: a history of goodwill impairments suggests management consistently overpays for acquisitions. Watch the gap between reporting unit fair value and carrying amount — when fair value exceeds carrying amount by less than 10-20%, a small decline in business performance could trigger a write-down. For finite-lived intangibles, examine useful life assumptions across customer relationships, technology, and trade names; aggressive estimates inflate near-term earnings. Compare total intangibles-to-total-assets ratios against peers to assess acquisition dependency. Rising goodwill as a percentage of equity can signal balance sheet fragility.