XM Radio 2008 Annual Report Download - page 60

equivalents on hand, marketable securities, available borrowings from Liberty Media, and expected cash flows from
operations in 2009 will be sufficient to satisfy our financial obligations through January 2010. Our financial
projections are based on assumptions, which we believe are reasonable, but contain uncertainties as noted above.
Unless otherwise indicated,
• “we,” “us,” “our,” the “company,” “the companies” and similar terms refer to Sirius XM Radio Inc. and its
consolidated subsidiaries;
• “SIRIUS” refers to Sirius XM Radio Inc. and its consolidated subsidiaries, excluding XM Satellite Radio
Holdings Inc. and its consolidated subsidiaries;
• “XM Holdings” refers to XM Satellite Radio Holdings Inc. and its consolidated subsidiaries, including XM
Satellite Radio Inc.; and
• “XM” refers to XM Satellite Radio Inc. and its consolidated subsidiaries.
(2) Principles of Consolidation and Basis of Presentation
Principles of Consolidation
The accompanying consolidated financial statements of Sirius XM Radio Inc. and subsidiaries have been
prepared in accordance with U.S. generally accepted accounting principles. We consolidate variable interest
entities, as defined by Financial Accounting Standards Board (“FASB”) Interpretation (“FIN”) No. 46(R),
Consolidation of Variable Interest Entities, An Interpretation of ARB No. 51, in which we are the primary
beneficiary. All intercompany transactions have been eliminated in consolidation.
Basis of Presentation
In presenting consolidated financial statements, management makes estimates and assumptions that affect the
amounts reported and related disclosures. Additionally, estimates were used when recording the fair values of assets
acquired and liabilities assumed in the Merger. Estimates, by their nature, are based on judgment and available
information. Actual results could differ from those estimates.
The results of XM Holdings’ operations have been included in the accompanying consolidated financial
statements of Sirius XM Radio Inc. from the date of the Merger. Although the effective date of the Merger was
July 28, 2008, due to the immateriality of the results of operations for the period between July 28 and July 31, 2008,
we have accounted for the Merger as if it had occurred on July 31, 2008 with the results and balances of XM
Holdings included as of July 31, 2008.
(3) Summary of Significant Accounting Policies
Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles
requires management to make estimates and assumptions that affect the amounts reported and related disclosures.
Significant estimates inherent in the preparation of the accompanying consolidated financial statements
include fair valuations of XM Holdings’ assets and liabilities, revenue recognition, asset impairment, useful lives of
our satellites, share-based payment expense, and valuation allowances against deferred tax assets. The financial
market volatility and poor economic conditions in the U.S. have impacted and will continue to impact our business.
Such conditions could have a material impact to our significant accounting estimates.
F-10
SIRIUS XM RADIO INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)