XM Radio 2009 Annual Report Download - page 193

expense charges, leasehold improvements and rent escalations that have initial terms ranging from one to fifteen
years, and certain leases that have options to renew. The effect of the rent holidays and rent concessions are
recognized on a straight-line basis over the lease term. Total rent recognized in connection with leases for the years
ended December 31, 2009, 2008 and 2007 was $44,374, $40,378 and $16,941, respectively.
Other. We have entered into various agreements with third parties for general operating purposes. In addition
to the minimum contractual cash commitments described above, we have entered into agreements with other
variable cost arrangements. These future costs are dependent upon many factors, including subscriber growth, and
are difficult to anticipate; however, these costs may be substantial. We may enter into additional programming,
distribution, marketing and other agreements that contain similar provisions.
We are required under the terms of certain agreements to provide letters of credit and deposit monies in escrow,
which place restrictions on cash and cash equivalents. As of December 31, 2009 and 2008, $3,400 and $141,250,
respectively, were classified as Restricted investments as a result of obligations under these letters of credit and
escrow deposits.
We do not have any other significant off-balance sheet arrangements that are reasonably likely to have a
material effect on our financial condition, results of operations, liquidity, capital expenditures or capital resources.
Legal Proceedings
FCC Merger Order. On July 25, 2008, the FCC adopted an order approving the Merger. In September 2008,
Mt. Wilson FM Broadcasters, Inc. filed a Petition for Reconsideration of the FCC’s merger order. This Petition for
Reconsideration remains pending.
Advanced Recording Functionality Disputes/Atlantic Recording Corporation, BMG Music, Capital Records,
Inc., Elektra Entertainment Group Inc., Interscope Records, Motown Record Company, L.P., Sony BMG Music
Entertainment, UMG Recordings, Inc., Virgin Records, Inc. and Warner Bros. Records Inc. v. XM Satellite Radio
Inc. Commencing in May 2006, holders of copyrights in sound recordings and holders of copyrights in musical
works brought, or threatened to bring, actions against SIRIUS and XM in connection with the advanced recording
functionality included in the XM Inno, the XM NeXus, the XM Helix, the XM SkyFi3, the SIRIUS S50 and the
SIRIUS Stiletto line of radios. The plaintiffs brought this action in the United States District Court for the Southern
District of New York, seeking monetary damages and equitable relief.
XM has settled these claims with the major record companies and a significant number of music publishers.
XM is in discussions to settle these claims with certain independent record companies and other music publishers.
Prior to introducing retail sales of devices with advanced recording functionality, SIRIUS entered into
agreements with the major recording companies concerning such devices. SIRIUS is in discussions to settle the
remaining claims with certain independent record companies and music publishers.
SIRIUS and XM believe that the distribution and use of their products do not violate applicable copyright laws.
There can be no assurance regarding the ultimate outcome of these matters and settlement discussions, or the
significance, if any, to our business, consolidated results of operations or financial position.
Other Matters. In the ordinary course of business, we are a defendant in various lawsuits and arbitration
proceedings, including actions filed by subscribers, both on behalf of themselves and on a class action basis; former
employees; parties to contracts or leases; and owners of patents, trademarks, copyrights or other intellectual
property. None of these actions are, in our opinion, likely to have a material adverse effect on our cash flows,
financial position or results of operations.
F-39
SIRIUS XM RADIO INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)