XM Radio 2012 Annual Report Download

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PROXY STATEMENT
AND
2012 ANNUAL REPORT
TABLE OF CONTENTS
Letter to Stockholders
Notice of Annual Meeting of Stockholders
Proxy Statement ........................................... 1
Annual Report
Management’s Discussion and Analysis of Financial Condition and
Results of Operations .................................... 1
Comparison of Cumulative Total Returns ...................... 27
Selected Financial Data .................................... 28
Quantitative and Qualitative Disclosure About Market Risks ....... 29
Reports of Independent Registered Public Accounting Firm ....... F-1
Consolidated Financial Statements ........................... F-3
Notes to Consolidated Financial Statements .................... F-8

Table of contents

  • Page 1
    PROXY STATEMENT AND 2012 ANNUAL REPORT TABLE OF CONTENTS Letter to Stockholders Notice of Annual Meeting of Stockholders Proxy Statement ...Annual Report Management's Discussion and Analysis of Financial Condition and Results of Operations ...Comparison of Cumulative Total Returns ...Selected ...

  • Page 2

  • Page 3
    ...in ten years. Today we are also working to market SiriusXM to new owners of the growing base of previously-owned vehicles with factory-installed satellite radios. Previously owned vehicles can be found in approximately 75% of U.S. households and represent approximately 75% of car sales. This channel...

  • Page 4
    ... road, signifying a significant opportunity for growth. As auto sales increase, our growth receives a meaningful tailwind, but we do not want to limit our focus to new cars. We've launched subscriber programs for customers at large used car retailers, such as CarMax, AutoNation and Penske, and now...

  • Page 5
    ... which has been well received by our customers. We've integrated our subscriber management systems, which now enables Sirius radios and XM radios to exist on a single consolidated account. This year we expect to launch our mobile service app to allow transactions and account management from the palm...

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  • Page 7
    ..., and your vote is immediately confirmed and tabulated. By using the Internet or telephone, you help us reduce postage, printing and proxy tabulation costs. By Order of the Board of Directors, PATRICK L. DONNELLY Executive Vice President, General Counsel and Secretary New York, New York April 11...

  • Page 8

  • Page 9
    ... Sirius XM have corporate governance guidelines and a code of ethics? ...EXECUTIVE COMPENSATION ...Compensation Discussion and Analysis ...Compensation Committee Report ...Summary Compensation Table ...Grants of Plan-Based Awards in 2012 ...Outstanding Equity Awards at Fiscal Year-End 2012 ...Option...

  • Page 10
    ...OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS ...Principal Accountant Fees and Services ...Pre-Approval Policy for Services of Independent Auditor ...Who is the Audit Committee's financial expert? ...Report of the Audit Committee ...ITEM 3 - STOCKHOLDER PROPOSAL REGARDING SUCCESSION PLANNING ...OTHER...

  • Page 11
    1221 Avenue of the Americas 36th Floor New York, New York 10020 PROXY STATEMENT This proxy statement contains information related to the annual meeting of stockholders of Sirius XM Radio Inc. to be held on Tuesday, May 21, 2013, beginning at 9:00 a.m., New York City time, in The Auditorium at The ...

  • Page 12
    ... by proxy and entitled to vote on the matter." Items 2 and 3 are not binding on our board of directors or the Company. When will voting results be available? We will announce preliminary voting results at the annual meeting. We will report final results in a Current Report on Form 8-K filed with the...

  • Page 13
    ... at any time before your shares are voted at the annual meeting by: • Notifying our Corporate Secretary in writing at Sirius XM Radio Inc., 1221 Avenue of the Americas, 36th Floor, New York, New York 10020 that you are revoking your proxy; • Executing and delivering a later dated proxy card or...

  • Page 14
    ...not indicate how you would like your shares voted, your proxy will vote in accordance with the recommendation of our board of directors. Who is soliciting my proxy, and who will pay for the costs of the solicitation? Sirius XM is soliciting your proxy. The cost of soliciting proxies will be borne by...

  • Page 15
    ..., Charles Y. Tanabe and our Chief Executive Officer, James E. Meyer, to our board of directors. John C. Malone and Charles Y. Tanabe have informed the Nominating and Corporate Governance Committee that they do not wish to stand for reelection at the annual meeting. To fill these expected vacancies...

  • Page 16
    ...from both a short- and long-term perspective. In addition, Mr. Carleton's service on other public company boards has provided him with a number of skills, including experience in the areas of leadership development and succession planning, risk assessment, and stockholder and government relations. 6

  • Page 17
    ... Communications Services Company, a provider of telephony and data distribution services, and NASA's Jet Propulsion Laboratory, the lead U.S. center for robotic exploration of the solar system. Mr. Hartenstein serves as a member of the board of directors of SanDisk Corporation and The City of...

  • Page 18
    ...a director at Motors Liquidation Corporation and Meridian Automotive during the last five years. Key Attributes, Experience and Skills: Mr. Holden has spent his career in the automotive business, a key market for our services. Mr. Holden's perspective on, and knowledge of, the workings, business and...

  • Page 19
    ...daily workings, but also with the essential experience, insight and expertise that can be provided only by a person who is intimately involved in running our business. His ability as director to add his views to the board's deliberations is of significant benefit to the other members of the board of...

  • Page 20
    ... Chief Financial Officer/ Chief Operating Officer at Baan Company, a business management software provider. From 1980 until 1999, Mr. Mooney held a number of positions with IBM Corporation, including Chief Financial Officer of the Americas. Mr. Mooney is a member of the board of directors of Sidera...

  • Page 21
    ... worked as an executive officer in various capacities for companies affiliated with Liberty Media. Mr. Vogel is a member of the boards of directors and audit committees of Shaw Communications, Inc., a diversified communications company providing broadband cable and direct-tohome satellite services...

  • Page 22
    ..., Sirius XM Radio Inc., 1221 Avenue of the Americas, 36th Floor, New York, New York 10020. Candidates who are suggested by our stockholders are evaluated by the Nominating and Corporate Governance Committee in the same manner as are other possible candidates to be directors. During 2012, our board...

  • Page 23
    ... Executive Officer. The board of directors has determined that it is currently in our best interests to separate the Chairman of the board position and the Chief Executive Officer position because it allows the Chief Executive Officer to focus on our day-to-day business, including risk management...

  • Page 24
    ...Mooney Vanessa A. Wittman • Selects our independent registered public accounting firm • Reviews reports of our independent registered public accounting firm • Reviews and approves the scope and cost of all services, including all nonaudit services, provided by the firm selected to conduct the...

  • Page 25
    ...the opinion of the Corporate Secretary, deals with the functions of the board or committees thereof or that he otherwise determines requires their attention. Directors may at any time review all correspondence received by us that is addressed to members of our board. In addition, the Audit Committee...

  • Page 26
    ... table provides compensation information for the year ended December 31, 2012 for each of our non-employee directors. Directors who are employees do not receive compensation for their services as directors. Change in Pension Value of Non-Qualified Non-Equity Deferred Fee Earned or Stock Option...

  • Page 27
    ...In addition, each member receives $70,000 in the form of options to purchase our common stock which are granted annually on the next business day following that year's annual meeting of stockholders. All options to purchase our common stock awarded to our non-employee directors vest over a four-year...

  • Page 28
    ... Based solely upon a review of reports filed pursuant to Section 16(a) of the Exchange Act and written representations furnished to us during our most recent fiscal year, we know of no director, executive officer or beneficial owner of more than ten percent of our common stock who failed to file...

  • Page 29
    ... year on calls to our compliance hotline and any changes or developments in compliance matters. Each quarter, our Chief Financial Officer reports to the board of directors on our performance and discusses how actual performance compares to our business plan and budget. Our executive officers report...

  • Page 30
    ... conversions of preferred stock and additional purchases of our common stock, Liberty Media beneficially owned, directly and indirectly, over 50% of our outstanding common stock as of February 28, 2013. Five current Liberty Media executives are members of our board of directors, and Liberty Media...

  • Page 31
    ... stockholders of an opportunity to receive a premium for their common stock as part of a sale of our Company and might ultimately affect the market price of our common stock. Does Sirius XM have corporate governance guidelines and a code of ethics? Our board of directors adopted the Guidelines which...

  • Page 32
    ... of nearly 23.9 million subscribers, an increase of over 9% as compared to 2011; executing an agreement with Nissan North America to become the exclusive provider of telematics services for Nissan branded vehicles; launching SiriusXM On Demand, which provides online subscribers the ability to choose...

  • Page 33
    ... each named executive officer within a particular range related to levels provided by peers. The Compensation Committee relies on the general business and industry knowledge and experience of its members and occasionally uses informal market comparisons as one of many factors in making compensation...

  • Page 34
    ...salary, annual bonus, long-term incentives, perquisites and other benefits. In addition, the Compensation Committee considers the other benefits to which the officer is entitled under his or her employment agreement, including compensation payable upon termination of employment. (The named executive...

  • Page 35
    ... to our named executive officers would be paid solely in cash. The bonus awards to our named executive officers are described below under "Fiscal Year 2012 Pay Implications - Payment of Performance-Based Discretionary Annual Bonuses for 2012" and are reflected in the Summary Compensation Table. 25

  • Page 36
    ... years, long-term compensation was granted solely in the form of stock options. Stock options have an exercise price equal to the market price on the date of grant, and therefore provide value to the executives if the executives create value for our stockholders. In addition, stock options generally...

  • Page 37
    ...for our other employees. The Compensation Committee carefully reviewed our performance against key metrics in our budget and business plan for 2012, including the generation of EBITDA, as required by the NEO Bonus Plan, our efforts to increase subscribers, revenue, adjusted EBITDA and free cash flow...

  • Page 38
    ...creating additional compelling and exclusive content; reducing the costs of certain programming; streamlining and introducing efficiencies into our programming operations; the sale of advertisements on our non-music channels; understanding and analyzing customer satisfaction levels as they relate to...

  • Page 39
    ... Grants - 2012 Stock Option Grants There were no long-term equity grants to any of our named executive officers in 2012. Fiscal Year 2013 Considerations The Compensation Committee expects to review our executive compensation program in 2013 with a view to ensuring that it continues to provide the...

  • Page 40
    ...pre-owned and used vehicles and managing our investment in infrastructure in this area; adding compelling content to our services while reducing programming expenses; expanding the programming content on Sirius XM Latino, the most comprehensive radio channel offering in the United States for Spanish...

  • Page 41
    ... annual report on Form 10-K for the year ended December 31, 2012. Compensation Committee CARL E. VOGEL, Chairman JAMES P. HOLDEN Summary Compensation Table The following table provides information concerning total compensation earned or paid to our Chief Executive Officer, our former Chief Executive...

  • Page 42
    ... made during fiscal year 2012 to the named executive officers. Outstanding Equity Awards at Fiscal Year-End 2012 The following table provides information with respect to the status at December 31, 2012 of all unexercised options awarded to each of the named executive officers. Number of Securities...

  • Page 43
    ...of business on December 18, 2012. The dividend was paid in cash on December 28, 2012. The Compensation Committee of our board of directors, which administers our stock incentive plans, adjusted the exercise price of stock options by decreasing the exercise price by $0.05 per share. The stock options...

  • Page 44
    ...and Stock Vested in 2012 The following table provides information with respect to option exercises and restricted stock and restricted stock units that vested during 2012. Option Awards Number of Shares Acquired Value Realized on Exercise on Exercise (#) ($)(1) Stock Awards Number of Shares Acquired...

  • Page 45
    ... annual base salary and the cash value of the bonus last paid or payable to him in respect of the fiscal year preceding the fiscal year in which the termination occurs and to continue his health and life insurance benefits for one year. In the event that any payment we make, or benefit we provide...

  • Page 46
    ... annual salary and the cash value of the bonus last paid or payable to him in respect of the preceding fiscal year and to continue his health and life insurance benefits for one year. In the event that any payment we make, or benefit we provide, to Mr. Donnelly would require him to pay an excise tax...

  • Page 47
    ... in the table of potential payments and benefits below. 2009 Long-Term Stock Incentive Plan All of our named executive officers have outstanding equity awards as of December 31, 2012 that were granted under the 2009 Long-Term Stock Incentive Plan. Under the terms of the 2009 plan, the outstanding...

  • Page 48
    ... of options is valued at (a) the difference between the closing price and the exercise price of the options multiplied by (b) the number of shares of common stock underlying the options. (2) Assumes that medical and dental benefits would be continued under COBRA for up to 18 months at current rates...

  • Page 49
    ... board of directors unanimously recommends a vote "FOR" the ratification of KPMG LLP as our independent registered public accountants for 2013. Principal Accountant Fees and Services The following table sets forth the fees billed to us by KPMG as of and for the years ended December 31, 2012 and 2011...

  • Page 50
    ... public accounting firm their independence. Based upon the review and discussions described in the preceding paragraph, the Audit Committee recommended to the board of directors that our audited financial statements be included in our Annual Report on Form 10-K for the year ended December 31, 2012...

  • Page 51
    ... the annual meeting: Resolved: That the shareholders of Sirius XM Radio, Inc. ("Company") hereby request that the Board of Directors initiate the appropriate process to amend the Company's Corporate Governance Guidelines ("Guidelines") to adopt and disclose a written and detailed succession planning...

  • Page 52
    ... proxy statement and our annual report for the year ended December 31, 2012 are available for you to view online at http://www.envisionreports.com/siri. By Order of the Board of Directors, Patrick L. Donnelly Executive Vice President, General Counsel and Secretary New York, New York April 11, 2013...

  • Page 53
    ...our Annual Report on Form 10-K for the year ended December 31, 2012, including financial statements and schedules thereto, are also available without charge to stockholders upon written request addressed to: Investor Relations Sirius XM Radio Inc. 1221 Avenue of the Americas 36th Floor New York, New...

  • Page 54

  • Page 55
    2012 ANNUAL REPORT

  • Page 56

  • Page 57
    ... 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 other subscription-related fees, the sale of advertising on...

  • Page 58
    ...: Subscriber revenue ...$2,962,665 Advertising revenue, net of agency fees ...82,320 Equipment revenue ...73,456 Other revenue ...283,599 Total revenue ...Operating expenses: Cost of services: Revenue share and royalties ...Programming and content ...Customer service and billing ...Satellite and...

  • Page 59
    ... in rates charged per spot. We expect our advertising revenue to grow as advertisers are attracted to our platform by the increase in our subscriber base. Equipment Revenue includes revenue and royalties from the sale of satellite radios, components and accessories. • 2012 vs. 2011: For the years...

  • Page 60
    ... in the benefit to earnings from the amortization of deferred credits on executory contracts initially recognized in purchase price accounting associated with the Merger. We expect our revenue share and royalty costs to increase as our revenues grow. Under the terms of the Copyright Royalty Board...

  • Page 61
    ... more cost effective terms. The impact of purchase price accounting adjustments associated with the Merger attributable to the amortization of the deferred credit on acquired programming executory contracts will continue to decline, in absolute amount and as a percentage of reported programming and...

  • Page 62
    ...rates per vehicle and increases in the benefit to earnings from the amortization of the deferred credit for acquired executory contracts recognized in purchase price accounting associated with the Merger. • 2011 vs. 2010: For the years ended December 31, 2011 and 2010, subscriber acquisition costs...

  • Page 63
    ... former subscribers. The impact of purchase price accounting adjustments associated with the Merger attributable to the amortization of the deferred credit on acquired sales and marketing contracts will continue to decline, in absolute amount and as a percentage of reported sales and marketing costs...

  • Page 64
    ...and restructuring of contracts, as well as charges related to the impairment of assets when those costs are deemed to provide no future benefit. • 2012 vs. 2011: In 2012 and 2011, we did not record any restructuring, impairments and related costs. • 2011 vs. 2010: For the year ended December 31...

  • Page 65
    ... with GAAP, foreign withholding taxes on royalty income, and the effect of changes in certain state laws related to the utilization of net operating losses ("NOLs"). • 2012 vs. 2011: For the year ended December 31, 2012, income tax benefit was $2,998,234 compared to income tax expense of $(14,234...

  • Page 66
    ...additions ...Deactivated subscribers ...Net additions ...Ending subscribers ...Self-pay ...Paid promotional ...Ending subscribers ...Self-pay ...Paid promotional ...Net additions ...Daily weighted average number of subscribers ...Average self-pay monthly churn ...New vehicle consumer conversion rate...

  • Page 67
    ... monthly revenue per subscriber, or ARPU; customer service and billing expenses, per average subscriber; subscriber acquisition cost, or SAC, per gross subscriber addition; free cash flow; and adjusted EBITDA. These measures exclude the impact of certain purchase price accounting adjustments. We use...

  • Page 68
    ... of our subscription rates beginning in January 2012, and an increase in subscriptions to premium services, partially offset by subscription discounts offered through customer acquisition and retention programs and a decrease in the contribution from the U.S. Music Royalty Fee. • 2011 vs. 2010...

  • Page 69
    ... share-based payment expense and purchase price accounting adjustments, divided by the number of months in the period, divided by the daily weighted average number of subscribers for the period. (See accompanying glossary on pages 20 through 26 for more details.) • 2012 vs. 2011: For the years...

  • Page 70
    ... increased OEM installations, customer service and billing costs related to longer average handle times and higher subscriber volume, and higher sales and marketing costs related to subscriber communications and cooperative marketing, partially offset by lower programming and content costs. • 2011...

  • Page 71
    ..., higher subscriber acquisition costs related to an 11% increase in gross subscriber additions and subsidies related to increased OEM installations, customer service and billing costs related to longer average handle times and higher subscriber volume, and higher sales and marketing costs related to...

  • Page 72
    ... current business plans, we believe that we have sufficient cash, cash equivalents and marketable securities to cover our estimated short-term and long-term funding needs. In 2012, we entered into a five year Senior Secured Revolving Credit Facility ("Credit Facility") which will be used for working...

  • Page 73
    ... included in this Annual Report. Stock Repurchase Program In December 2012, we announced that our board of directors approved a $2,000,000 common stock repurchase program, which we will begin utilizing in 2013. Shares of common stock may be purchased from time to time on the open market or in...

  • Page 74
    ... to our annual evaluation of the carrying value of goodwill, there were no events or circumstances that triggered the need for an interim evaluation for impairment. As a result, there were no impairment charges to our goodwill during the years ended December 31, 2012 and 2011. Long-Lived and...

  • Page 75
    ... the consideration of our long term financial projections, current and historical weighted average cost of capital and liquidity factors, legal and regulatory issues and industry and market pressures. Subsequent to our annual evaluation of the carrying value of our long-lived assets, there were...

  • Page 76
    ... related costs, (iv) depreciation and amortization and (v) share-based payment expense. The purchase price accounting adjustments include: (i) the elimination of deferred revenue associated with the investment in XM Canada, (ii) recognition of deferred subscriber revenues not recognized in purchase...

  • Page 77
    ... 31, 2012 2011 2010 Net income (GAAP): ...$ 3,472,702 $ 426,961 $ 43,055 Add back items excluded from Adjusted EBITDA: Purchase price accounting adjustments: Revenues (see pages 22-24) ...7,479 10,910 21,906 Operating expenses (see pages 22-24) ...(289,278) (277,258) (261,832) Share-based payment...

  • Page 78
    ... 31, 2012, 2011 and 2010: Unaudited For the Year Ended December 31, 2012 Purchase Price Allocation of Accounting Share-based As Reported Adjustments Payment Expense Adjusted (in thousands) Revenue: Subscriber revenue ...$2,962,665 Advertising revenue, net of agency fees ...82,320 Equipment revenue...

  • Page 79
    (in thousands) Unaudited For the Year Ended December 31, 2011 Purchase Price Allocation of Accounting Share-based As Reported Adjustments Payment Expense Adjusted Revenue: Subscriber revenue ...Advertising revenue, net of agency fees ...Equipment revenue ...Other revenue ...Total revenue ... $2,...

  • Page 80
    (in thousands) Unaudited For the Year Ended December 31, 2010 Purchase Price Allocation of Accounting Share-based As Reported Adjustments Payment Expense Adjusted Revenue: Subscriber revenue ...Advertising revenue, net of agency fees ...Equipment revenue ...Other revenue ...Total revenue ... $2,...

  • Page 81
    ... the Years Ended December 31, 2012 2011 2010 Customer service and billing expenses (GAAP) ...Less: share-based payment expense, net of purchase price accounting adjustments ...Add: purchase price accounting adjustments ...Daily weighted average number of subscribers ...Customer service and billing...

  • Page 82
    ... of new vehicles that receive our service and convert to become self-paying subscribers after the initial promotion period. At the time satellite radio enabled vehicles are sold or leased, the owners or lessees generally receive trial subscriptions ranging from three to twelve months. Promotional...

  • Page 83
    ...-12 DOLLARS Nasdaq Telecommunications Index Sirius XM Radio Inc. Stockholder Return Performance Table NASDAQ Telecommunications Index S&P 500 Index Sirius XM Radio Inc. December 31, 2007 ...December 31, 2008 ...December 31, 2009 ...December 31, 2010 ...December 31, 2011 ...December 31, 2012...

  • Page 84
    ... Statements and related notes thereto included in this Annual Report and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in this Annual Report. As of and for the Years Ended December 31, 2012 (in thousands, except per share data) 2011 2010 2009...

  • Page 85
    ... reflect the results and balances of XM Satellite Radio Holdings Inc. from the date of the Merger and a $4,766,190 goodwill impairment charge. (3) The net income (loss) per share-basic calculations were corrected for an immaterial error for the years ended December 31, 2011 and 2010. See Notes 3 and...

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    Report of Independent Registered Public Accounting Firm The Board of Directors and Stockholders Sirius XM Radio Inc. and subsidiaries: We have audited the accompanying consolidated balance sheets of Sirius XM Radio Inc. and subsidiaries as of December 31, 2012 and 2011, and the related consolidated ...

  • Page 88
    ... of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Sirius XM Radio Inc. and subsidiaries as of December 31, 2012 and 2011, and the related consolidated statements of comprehensive income, stockholders' equity, and cash flows for each of the years in...

  • Page 89
    ...For the Years Ended December 31, 2012 2011 2010 (in thousands, except per share data) Revenue: Subscriber revenue ...Advertising revenue, net of agency fees ...Equipment revenue ...Other revenue ...Total revenue ...Operating expenses: Cost of services: Revenue share and royalties ...Programming and...

  • Page 90
    ... ...Accounts receivable, net ...Receivables from distributors ...Inventory, net ...Prepaid expenses ...Related party current assets ...Deferred tax asset ...Other current assets ...Total current assets ...Property and equipment, net ...Long-term restricted investments ...Deferred financing fees...

  • Page 91
    ...of tax ...- Issuance of common stock to employees and employee benefit plans, net of forfeitures ...- Share-based payment expense ...- Exercise of options and vesting of restricted stock units ...- Issuance of common stock upon exercise of warrants ...- Return of shares under share borrow agreements...

  • Page 92
    ... payable and accrued expenses ...Accrued interest ...Deferred revenue ...Related party liabilities ...Other long-term liabilities ...Net cash provided by operating activities ...Cash flows from investing activities: Additions to property and equipment ...Purchase of restricted investments ...Sale...

  • Page 93
    SIRIUS XM RADIO INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS - (Continued) (in thousands) For the Years Ended December 31, 2012 2011 2010 Supplemental Disclosure of Cash and Non-Cash Flow Information Cash paid during the period for: Interest, net of amounts capitalized ...Income ...

  • Page 94
    ... 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. We also derive revenue from other subscription-related fees, the sale of advertising on select non-music...

  • Page 95
    ... in 2012, 2011 or 2010. Goodwill and Other Intangible Assets Goodwill represents the excess of the purchase price over the estimated fair value of net tangible and identifiable intangible assets acquired in business combinations. Our annual impairment assessment of our single reporting unit is...

  • Page 96
    ... from subscribers consists of subscription fees, daily rental fleet revenue and non-refundable activation and other fees. Revenue is recognized as it is realized or realizable and earned. We recognize subscription fees as our services are provided. At the time of sale, vehicle owners purchasing or...

  • Page 97
    ... a satellite radio and a prepaid subscription to our service in the sale or lease price of a new vehicle; subsidies paid for chip sets and certain other components used in manufacturing radios; device royalties for certain radios; commissions paid to automakers as incentives to purchase, install and...

  • Page 98
    ... in future periods. Stock-based awards granted to employees, non-employees and members of our board of directors include warrants, stock options, restricted stock and restricted stock units. Income Taxes Deferred income taxes are recognized for the tax consequences related to temporary differences...

  • Page 99
    ...could be exchanged in an orderly transaction between market participants. As of December 31, 2012 and 2011, the carrying amounts of cash and cash equivalents, accounts and other receivables, and accounts payable approximated fair value due to the short-term nature of these instruments. ASC 820, Fair...

  • Page 100
    ... comprised of foreign currency translation adjustments related to our interest in Sirius XM Canada. During the years ended December 31, 2012, 2011 and 2010, we recorded a foreign currency translation adjustment of $49, $(140) and $251, respectively, which is recorded net of taxes of $48, $11 and $63...

  • Page 101
    ... stock, warrants, stock options, restricted stock and restricted stock units) were exercised or converted into common stock, calculated using the treasury stock method. Common stock equivalents of approximately 147,125,000, 419,752,000 and 689,922,000 for the years ended December 31, 2012, 2011...

  • Page 102
    ... unbilled amounts due from OEMs for radio services included in the sale or lease price of vehicles, as well as billed amounts due from retailers. Receivables from distributors consist of the following: December 31, 2012 December 31, 2011 Billed ...Unbilled ...Total ...(5) Inventory, net $ 53,057...

  • Page 103
    ... of each year, and an assessment is performed at other times if an event occurs or circumstances change that would more likely than not reduce the fair value of the asset below its carrying value. At the date of our annual assessment for 2012 and 2011, the fair value of our single reporting unit...

  • Page 104
    ... satellite digital audio radio service and provide ancillary services. The following table outlines the years in which each of our licenses expires: FCC satellite licenses Expiration year SIRIUS FM-1 ...SIRIUS FM-2 ...SIRIUS FM-3 ...SIRIUS FM-5 ...SIRIUS FM-6 (1) XM-1 ...XM-2 ...XM-3 ...XM-4 ...XM...

  • Page 105
    ...capitalized costs related to our XM-5 satellite and related launch vehicle. We also incur interest costs on all of our debt instruments and on our satellite incentive agreements. The following is a summary of our interest costs: For the Years Ended December 31, 2012 2011 2010 Interest costs charged...

  • Page 106
    ...2011: Related party current assets 2012 2011 Related party long-term assets 2012 2011 Related party current liabilities 2012 2011 Related party long-term liabilities 2012 2011 Related party long-term debt 2012 2011 Liberty Media 757 $ 1,212 $3,980 $ 9,722 $ - $ - $208,906 $328,788 Sirius XM Canada...

  • Page 107
    ...A shares on a converted basis of CSR, representing a 37.9% equity interest and a 25.0% voting interest. We had the following related party current asset balances attributable to Sirius XM Canada at December 31, 2012 and 2011: For the Years Ended December 31, 2012 2011 Deferred programming costs and...

  • Page 108
    ...due to us. We provide Sirius XM Canada with chip sets and other services and we are reimbursed for these costs. We had the following related party long-term asset balances attributable to Sirius XM Canada at December 31, 2012 and 2011: For the Years Ended December 31, 2012 2011 Non-interest bearing...

  • Page 109
    ...Merger, with the right to offer XM satellite radio service in Canada. The agreements have an initial ten year term and Sirius XM Canada has the unilateral option to extend the agreements for an additional five year term. We receive a 15% royalty for all subscriber fees earned by XM Canada each month...

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    ... ...Subscriber and activation fee royalties ...Licensing fee revenue ...Advertising reimbursements ...Total revenue from XM Canada ...* XM Canada combined with Sirius Canada in June 2011. $ 1,388 5,483 3,000 833 $10,704 $ 2,776 10,313 4,500 1,083 $18,672 Our share of net earnings or losses of XM...

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    ...During the term of the agreement, GM has agreed to distribute our service. We subsidize a portion of the cost of satellite radios and make incentive payments to GM when the owners of GM vehicles with factory- or dealer- installed satellite radios become self-paying subscribers. We also share with GM...

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    ...2012 and 2011, our Long-term restricted investments were $3,999 and $3,973, respectively. During the year ended December 31, 2011, $250 of obligations relating to these letters of credit were terminated and a new letter of credit agreement was entered into for $826 for additional space. Auction Rate...

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    ...will be used for working capital and other general corporate purposes, including financing acquisitions, share repurchases and dividends. Interest on borrowings is payable on a quarterly basis and accrues at a rate based on LIBOR plus an applicable rate. We are also required to pay a variable fee on...

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    SIRIUS XM RADIO INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED ...year ended December 31, 2012, consisting primarily of unamortized discount, deferred financing fees and repayment premium, to Loss on extinguishment of debt and credit facilities, net. 3.25% Convertible Notes due 2011 In 2011, we purchased...

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    ... of business on December 18, 2012. The dividend was paid in cash on December 28, 2012 in the amount of $327,062. Stock Repurchase Program In December 2012, we announced that our board of directors approved a $2,000,000 common stock repurchase program. Shares of common stock may be purchased from...

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    ... fees, net, and $801 recorded in Long-term related party assets. These costs will continue to be amortized until the debt is terminated. Other In January 2004, Sirius Satellite Radio Inc. signed a seven-year agreement with a sports programming provider which expired in February 2011. Upon execution...

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    ... years ended December 31, 2012, 2011 and 2010, respectively. 2009 Long-Term Stock Incentive Plan In May 2009, our stockholders approved the Sirius XM Radio Inc. 2009 Long-Term Stock Incentive Plan (the "2009 Plan"). Employees, consultants and members of our board of directors are eligible to receive...

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    ... option value is set to zero for all periods. There were no options granted to third parties, other than non-employee members of our board of directors, during the years ended December 31, 2012, 2011 and 2010. The following table summarizes stock option activity under our share-based payment plans...

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    ... years ended December 31, 2012, 2011 and 2010, respectively. The following table summarizes the nonvested restricted stock and restricted stock unit activity under our share-based payment plans for the years ended December 31, 2012, 2011 and 2010 (shares in thousands): Shares Grant Date Fair Value...

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    SIRIUS XM RADIO INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Total unrecognized compensation costs related to unvested share-based payment awards for stock options and restricted stock units and shares granted to employees and members of our board of directors at ...

  • Page 121
    ... construct a satellite and related launch vehicle for use in our systems. Programming and content. We have entered into various programming agreements. Under the terms of these agreements, our obligations include fixed payments, advertising commitments and revenue sharing arrangements. Marketing and...

  • Page 122
    ...and Don Buchwald v. Sirius XM Radio Inc. In March 2011, One Twelve, Inc., Howard Stern's production company, and Don Buchwald, Stern's agent, commenced an action against us in the Supreme Court of the State of New York, County of New York. The action alleged that, upon the Merger, we failed to honor...

  • Page 123
    ...) The following table indicates the significant elements contributing to the difference between the federal tax (benefit) expense at the statutory rate and at our effective rate: For the Years Ended December 31, 2012 2011 2010 Federal tax expense, at statutory rate ...State income tax expense, net...

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    ... tax rate. This liability is recorded in Other long-term liabilities. No penalties have been accrued for. We do not currently anticipate that our existing reserves related to uncertain tax positions as of December 31, 2012 will significantly increase or decrease during the twelve-month period...

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    ...material to any previously reported quarterly or annual period. The corrected net income per common share - basic calculations are presented in the quarterly results of operations table. The previously reported net income per common share - basic for the three months ended March 31, 2012 and June 30...

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    ... a benefit to the holders compared to an exchange rate of 543.1372 shares of common stock in effect prior to occurrence of such Fundamental Change. A holder of the Exchangeable Notes may also elect to retain his or her Notes pursuant to their terms through maturity on December 1, 2014, or otherwise...

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    SIRIUS XM RADIO INC. AND SUBSIDIARIES Schedule II - Schedule of Valuation and Qualifying Accounts Balance January 1, Charged to Expenses (Benefit) Write-offs/ Payments/ Other Balance December 31, (in thousands) Description 2010 Allowance for doubtful accounts ...Deferred tax assets - valuation ...

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    ... Counsel (Retired) Liberty Media Corporation Carl E. Vogel Director Senior Advisor Dish Network Corporation Vanessa A. Wittman Director Senior Vice President and CFO Motorola Mobility Executive Offices Sirius XM Radio Inc. 1221 Avenue of the Americas 36th Floor New York, New York 10020 212.584.5100...

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    ...The transfer agent and registrar for the Company's common stock is: Independent Registered Public Accounting Firm KPMG LLP 345 Park Avenue New York, New York 10154 Computershare Shareowner Services P.O. Box 358015 Pittsburgh, PA 15252-8015 1-877-268-1949 (toll free) and 201-680-6685 (international...

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