Long-Lived Assets

The total depreciation, amortization and accretion expenses related to property and equipment, amortizable intangible assets, and asset retirement obligations for the years ended December 31, 2015, 2014 and 2013 were $14.0 million, $16.7 million and $15.2 million, respectively. The consolidated balances consisted of the following for the periods stated:



	For the Year Ended December 31,
	2015		2014		2013
	(Dollars in thousands)
Depreciation	$	8,570	$	10,200	$	9,664
Amortization	4,735		5,722		4,965
Accretion	665		755		538
Total depreciation, amortization and accretion	$	13,970	$	16,677	$	15,167

Property and Equipment — A component of depreciation expense relates to the depreciation of certain of our paging equipment assets. The primary component of these assets are transmitters, which incurred total depreciation expense of $0.7 million, $0.9 million, and $1.1 million, for the years ended December 31, 2015, 2014 and 2013, respectively. Transmitter assets are grouped into tranches based on our transmitter decommissioning forecast and are depreciated using the group life method on a straight-line basis. Depreciation expense is determined by the expected useful life of each tranche of the underlying transmitter assets. The expected useful life is based on our forecasted usage of those assets and their retirement over time and aligns the useful lives of these transmitter assets with their planned removal from service. This rational and systematic method matches the underlying usage of these assets to the underlying revenue that is generated from these assets.

Depreciation expense for these assets is subject to change based upon revisions in the timing of transmitter deconstruction resulting from our long-range planning and network rationalization process. During the fourth quarter of 2015, we completed a review of the estimated useful life of our transmitter assets (that are part of paging and computer equipment). This review was based on the results of our long-range planning and network rationalization process and indicated that the expected useful life of the last tranche of the transmitter assets was no longer appropriate. As a result of that review, the expected useful life of the final tranche of transmitter assets was extended from 2019 to 2020. This change resulted in a revision of the expected future depreciation expense for the transmitter assets beginning in the fourth quarter of 2015. We believe these estimates remain reasonable at the present time, but we can give no assurance that changes in technology, customer usage patterns, our financial condition, the economy or other factors would not result in changes to our transmitter decommissioning plans. Any further variations from our estimates could result in a change in the expected useful lives of the underlying transmitter assets and operating results could differ in the future by any difference in depreciation expense.

The extension of the depreciable life qualified as a change in accounting estimate. In the fourth quarter of 2015, depreciation expense was approximately $36,000 less than it would have been had the depreciable lives not been extended.

Asset Retirement Obligations — Asset retirement costs are reflected in paging equipment assets with depreciation expense recognized over the estimated lives, which range between one and five years. The asset retirement costs were $3.6 million and $2.8 million at December 31, 2015 and 2014, respectively. The net increase in asset retirement costs in 2015 is related to the increase in paging equipment assets during the period.

Depreciation, amortization and accretion for the years ended December 31, 2015, 2014 and 2013 included benefits of $0.5 million, $0.3 million and $1.0 million, respectively, related to depreciation of these asset retirement costs. The benefits in depreciation expense for these years are due to net increases to the asset retirement costs as a result of changes in the timing and costs of the transmitter deconstructions.

The asset retirement costs and the corresponding liabilities that have been recorded to date generally relate to either current plans to consolidate networks or to remove assets at a future terminal date.

The components of the changes in the asset retirement obligation liabilities for the periods stated were as follows:



	Short-Term Portion			Long-Term Portion			Total
	(Dollars in thousands)
Balance at January 1, 2014	$	358		$	7,599		$	7,957
Accretion	28			727			755
Amounts Paid	(399		)	—			(399		)
Reductions recorded	(141		)	(1,025		)	(1,166		)
Reclassifications	496			(496		)	—
Balance at December 31, 2014	$	342		$	6,805		$	7,147
Accretion	125			540			665
Amounts Paid	(176		)	—			(176		)
Increases and (reductions) recorded	(55		)	258			203
Reclassifications	60			(60		)	—
Balance at December 31, 2015	$	296		$	7,543		$	7,839

At December 31, 2015 and 2014, accrued other liabilities included $0.3 million of asset retirement liabilities related to our efforts to reduce the number of transmitters in operation; other long-term liabilities included $7.5 million and $6.8 million, respectively, related primarily to an estimate of the costs of deconstructing assets through the terminal date. The primary variables associated with these estimates are the number of transmitters and related equipment to be removed, the timing of removal, and a fair value estimate of the outside contractor fees to remove each asset. The fair value estimate of contractor fees to remove each asset is assumed to escalate by 4% each year through the terminal date.

The cost associated with the estimated removal costs and timing refinements due to ongoing network rationalization activities will accrete to a total liability of $9.3 million. The accretion was recorded on the interest method utilizing the following discount rates for the specified periods:




Period	Discount Rate
2015 – January 1 through December 31 – Additions⁽¹⁾	11.50	%
2015 – December 31 - Incremental Estimates⁽²⁾	10.48	%
2014 – January 1 through December 31 – Additions⁽¹⁾	10.48	%
2014 – December 31 - Incremental Estimates⁽²⁾	12.10	%
2013 – December 31 Additions⁽¹⁾ and Incremental Estimates	10.48	%
2013 – January 1 through September 30 – Additions⁽¹⁾	10.60	%


⁽¹⁾	Transmitters moved to new sites resulting in additional liability. Weighted average credit adjusted risk-free rate used to discount additions.


⁽²⁾	Weighted average credit adjusted risk-free rate used to discount downward revision to estimated future cash flows.

The total estimated liability is based on the transmitter locations remaining after we have consolidated the number of networks we operate and assume the underlying leases continue to be renewed to that future date. Accretion expense on the asset retirement obligation liabilities for the years ended December 31, 2015, 2014 and 2013 included $0.7 million, $0.8 million and $0.5 million, respectively.

We believe these estimates are reasonable at the present time, but we can give no assurance that changes in technology, our financial condition, the economy or other factors would not result in higher or lower asset retirement obligations. Any variations from our estimates would generally result in a change in the assets and liabilities in equal amounts, and operating results would differ in the future by any difference in depreciation expense and accretion expense.

Amortizable Intangible Assets and Goodwill — Other intangible assets consiste of a covenant not to compete with a former executive which was amortized over a three year period and intangible assets related to the acquisition of Amcom that are being amortized over two to fifteen years. These intangibles primarily related to the acquired Amcom trademarks and trade name that were impacted by our rebranding to SPŌK. In 2015, we reviewed the remaining useful life of the software intangibles that had initially been set to amortize over fifteen years. At the time the intangible assets were reassessed, they had been amortized for approximately three years. Upon reassessment, we determined the remaining useful life to be three years and are amortizing the remaining balance over this period. We have not recorded an impairment of our amortizable intangible assets during the years ended December 31, 2015, 2014 and 2013.

The net consolidated balance of amortizable intangible assets consisted of the following at December 31, 2015 and 2014:



		As of December 31,
		2015							2014
	Useful Life (In Years)	Gross Carrying Amount		Accumulated Amortization			Net Balance		Gross Carrying Amount		Accumulated Amortization			Net Balance
		(Dollars in thousands)
Customer relationships	10	$	25,002	$	(12,084	)	$	12,918	$	25,002	$	(9,584	)	$	15,418
Acquired technology	2 - 4	8,452		(8,339		)	113		8,452		(7,741		)	711
Non-compete agreements	3 - 5	2,370		(2,352		)	18		2,370		(2,242		)	128
Trademarks	6	5,754		(3,839		)	1,915		5,754		(2,313		)	3,441
Total amortizable intangible assets		$	41,578	$	(26,614	)	$	14,964	$	41,578	$	(21,880	)	$	19,698

Aggregate amortization expense for other intangible assets for the years ended December 31, 2015, 2014 and 2013 was $4.7 million, $5.7 million and $5.0 million, respectively. During 2014, we increased trademarks by approximately $52,000 due to the purchase of the website domain name associated with the Company re-branding to the name SPŌK in 2014. No additions were made in 2015.

Estimated amortization of intangible assets for future periods was as follows:




For the year ending December 31,	(Dollars in thousands)

2016	$	4,160
2017	2,886
2018	2,500
2019	2,500
2020	2,500
Thereafter	418
Total	$	14,964

Goodwill at both December 31, 2015 and 2014 was $133.0 million. Goodwill is not amortized but is evaluated for impairment at least annually, or when events or circumstances suggested a potential impairment had occurred. (See Note 1)

We did not record any impairment of goodwill for the years ended December 31, 2015, 2014 or 2013.