XM Radio 2009 Annual Report Download - page 168

average common shares outstanding for the potential dilution that could occur if common stock equivalents
(convertible debt and preferred stock, warrants, stock options and restricted stock shares and units) were exercised
or converted into common stock. Common stock equivalents of approximately 3,381,905,000, 787,000,000 and
165,000,000 for the years ended December 31, 2009, 2008 and 2007, respectively, were not included in the
calculation of diluted net loss per common share as the effect would have been anti-dilutive.
Cash and Cash Equivalents
Cash and cash equivalents consist of cash on hand, money market funds, certificates of deposit, in-transit credit
card receipts and highly liquid investments with an original maturity of three months or less when purchased. Cash
and cash equivalents are stated at fair market value.
Accounts Receivable
Accounts receivable are stated at amounts due from customers net of an allowance for doubtful accounts. Our
allowance for doubtful accounts considers historical experience, the age of amounts due, current economic
conditions and other factors that may affect the debtor’s ability to pay.
Accounts receivable, net, consists of the following:
2009 2008
December 31,
Gross accounts receivable ...................................... $122,247 $112,884
Allowance for doubtful accounts ................................. (8,667) (10,860)
Total accounts receivable, net.................................. $113,580 $102,024
Receivables from Distributors
Receivables from distributors are amounts due from OEMs and others for prepaid subscriptions.
Inventory
Inventory consists of finished goods, refurbished goods, chip sets and other raw material components used in
manufacturing radios. Inventory is stated at the lower of cost, determined on a first-in, first-out basis, or market. We
record an estimated allowance for inventory that is considered slow moving and obsolete or whose carrying value is
in excess of net realizable value. The provision related to products purchased for our direct to consumer distribution
channel is reported as a component of Cost of equipment in our consolidated statements of operations. The
remaining provision is reported as a component of Subscriber acquisition costs in our consolidated statements of
operations.
Inventory, net, consists of the following:
2009 2008
December 31,
Raw materials ............................................... $17,370 $ 11,648
Finished goods ............................................... 19,704 38,323
Allowance for obsolescence ..................................... (20,881) (25,509)
Total inventory, net .......................................... $16,193 $ 24,462
F-14
SIRIUS XM RADIO INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)