XM Radio 2011 Annual Report Download - page 96

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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, entertainment, comedy, talk, news, traffic and weather channels in the
United States on a subscription fee basis through two proprietary satellite radio systems. Subscribers can also
receive certain of our music and other channels over the Internet, including through applications for mobile
devices. We have agreements with every major automaker (“OEMs”) to offer satellite radios as factory- or
dealer-installed equipment in their vehicles. We also distribute our satellite radios through retail locations
nationwide and through our website. Satellite radio services are also offered to customers of certain daily rental
car companies.
Our primary source of revenue is subscription fees, with most of our customers subscribing on an annual,
semi-annual, quarterly or monthly basis. We offer discounts for prepaid and long-term subscription plans, as well
as discounts for multiple subscriptions on each platform. We also derive revenue from activation and other
subscription-related fees, the sale of advertising on select non-music channels, the direct sale of satellite radios,
components 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 new and
pre-owned 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.
(2) Summary of Significant Accounting Policies
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
intercompany transactions have been eliminated in consolidation.
Basis of Presentation
In the opinion of management, all normal recurring adjustments necessary for a fair presentation of our
consolidated financial statements as of December 31, 2011 and 2010, and for the years ended December 31,
2011, 2010 and 2009 have been made.
We have evaluated events subsequent to the balance sheet date and prior to the filing of the Annual Report
on Form 10-K for the year ended December 31, 2011 and have determined no events have occurred that would
require adjustment to or disclosure in our consolidated financial statements.
Reclassifications
Certain amounts in our prior period consolidated financial statements have been reclassified to conform to
our current period presentation.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and footnotes. Estimates, by their
nature, are based on judgment and available information. Actual results could differ materially from those
estimates.
F-8