XM Radio 2009 Annual Report Download - page 169

Investments
Marketable Securities — Marketable securities consist of certificates of deposit, auction rate certificates and
investments in debt and equity securities of other entities. Our investment policy objectives are the preservation of
capital, maintenance of liquidity to meet operating requirements and yield maximization. Marketable securities are
classified as available-for-sale securities and carried at fair market value. Unrealized gains and losses on
available-for-sale securities are included in Accumulated other comprehensive (loss) income, net of tax, as a
separate component of Stockholders’ equity (deficit). Realized gains and losses, dividends and interest income,
including amortization of the premium or discount arising at purchase, are included in Interest and investment
income. The specific-identification method is used to determine the cost of all securities and the basis by which
amounts are reclassified from Accumulated other comprehensive (loss) income into earnings.
We received proceeds from the sale or maturity of marketable securities of $0, $5,469 and $15,031 for the
years ended December 31, 2009, 2008 and 2007, respectively. We recorded $473 of net unrealized gains on
marketable securities for the year ended December 31, 2009 and $1,040 of net unrealized losses on marketable
securities for the year ended December 31, 2008.
Restricted Investments — We have certificates of deposit, money market funds and interest-bearing accounts
which are restricted as to their withdrawal. We received proceeds from the release of restricted investments of $0,
$60,400 and $25,160 for the years ended December 31, 2009, 2008 and 2007, respectively.
Equity Method Investments — Investments in which we have the ability to exercise significant influence but
not control are accounted for pursuant to the equity method of accounting. We recognize our proportionate share of
earnings or losses of our affiliates as they occur as a component of Other (expense) income in our consolidated
statements of operations. We evaluate our equity method investments for impairment whenever events, or changes
in circumstances, indicate that the carrying amounts of such investments may not be recoverable. The difference
between the carrying value and the estimated fair values of our equity method investments is recognized as an
impairment loss when the loss is deemed to be other than temporary.
Cost Method Investments — Investments in equity securities that do not have readily determinable fair values
and in which we do not have a controlling interest or are unable to exert significant influence are recorded at cost.
ASC 820, Fair Value Measurements and Disclosures, establishes a fair value hierarchy for input into valuation
techniques as follows: i) Level 1 input — unadjusted quoted prices in active markets for identical instrument;
ii) Level 2 input — observable market data for the same or similar instrument but not Level 1; and iii) Level 3
input — unobservable inputs developed using management’s assumptions about the inputs used for pricing the
asset or liability. We use Level 3 inputs to fair value our investments in auction rate certificates issued by student
loan trusts and the 8% convertible unsecured subordinated debentures issued by XM Canada. These investments are
not material to our consolidated results of operations or financial position.
Investments are periodically reviewed for impairment and a write down is recorded whenever declines in fair
value below carrying value are determined to be other than temporary. In making this determination, we consider,
among other factors, the severity and duration of the decline as well as the likelihood of a recovery within a
reasonable timeframe.
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SIRIUS XM RADIO INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)