XM Radio 2009 Annual Report Download - page 163

SIRIUS XM RADIO INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollar amounts in thousands, unless otherwise stated)
(1) Business
We broadcast our music, sports, news, talk, entertainment, traffic and weather channels in the United States for
a subscription fee through our proprietary satellite radio systems — the SIRIUS system and the XM system. In July
2008, our wholly owned subsidiary, Vernon Merger Corporation, merged (the “Merger”) with and into XM Satellite
Radio Holdings Inc. and, as a result, XM Satellite Radio Holdings Inc. is now our wholly owned subsidiary. The
SIRIUS system consists of four in-orbit satellites, over 125 terrestrial repeaters that receive and retransmit signals,
satellite uplink facilities and studios. The XM system consists of four in-orbit satellites, over 650 terrestrial
repeaters that receive and retransmit signals, satellite uplink facilities and studios. Subscribers can also receive
certain of our music and other channels over the Internet.
Our satellite radios are primarily distributed through automakers (“OEMs”); nationwide through retail
locations; and through our websites. We have agreements with every major automaker to offer SIRIUS or XM
satellite radios as factory or dealer-installed equipment in their vehicles. SIRIUS and XM radios are also offered to
customers of rental car companies.
Our primary source of revenue is subscription fees, with most of our customers subscribing to an annual, semi-
annual, quarterly or monthly plan. We also derive revenue from activation and other fees, the sale of advertising on
select non-music channels, the direct sale of satellite radios and accessories, and other ancillary services, such as our
Backseat TV, data and weather services.
In certain cases, automakers include a subscription to our radio services in the sale or lease price of vehicles.
The length of these prepaid subscriptions varies, but is typically three to twelve months. In many cases, we receive
subscription payments from automakers in advance of the activation of our service. We also reimburse various
automakers for certain costs associated with satellite radios installed in their vehicles.
We also have an interest in the satellite radio services offered in Canada.
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., XM Satellite Radio Inc. and their respective 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 (“GAAP”). All significant intercom-
pany transactions have been eliminated in consolidation.
Basis of Presentation
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
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