XM Radio 2013 Annual Report Download - page 62

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on our investments and our share of Sirius XM Canada’s net income, partially offset by the amortization
expense related to our equity method intangible assets. The interest and investment income for 2011 was
primarily due to income from our interests in Sirius XM Canada due to the realized net gain from the XM
Canada and Sirius Canada merger in the second quarter of 2011.
Loss on change in value of derivatives represents the change in fair value of the commitments under the
share repurchase agreement with Liberty Media, which are accounted for as a derivative.
•2013 vs. 2012: For the year ended December 31, 2013, net loss on change in value of derivatives was
$20,393 which resulted from the change in value of the shares to be repurchased under the share
repurchase agreement with Liberty Media. We expect to repurchase approximately 92,889,000 shares of
common stock from Liberty Media on April 25, 2014 at a price of $3.66 per share. The value of the
derivative will fluctuate based on the movement of our stock price. For the years ended December 31,
2012 and 2011, we did not record any losses on change in value of derivatives.
Income Taxes
Income Tax (Expense) Benefit includes the change in our deferred tax assets, foreign withholding taxes and
current federal and state tax expenses.
•2013 vs. 2012: For the year ended December 31, 2013, income tax expense was $259,877 compared to
income tax benefit of $2,998,234 for 2012. Our annual effective tax rate for the year ending
December 31, 2013 was 41% primarily as a result of $9,545 of non-deductible expenses related to the loss
on change in value of derivatives. For the year ended December 31, 2012, we released $3,195,651 of
valuation allowance due to the cumulative positive evidence that it is more likely than not that our
deferred tax assets will be realized.
•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 for 2011. For the year ended December 31, 2012, we released $3,195,651
of valuation allowance due to the cumulative positive evidence that it is more likely than not that our
deferred tax assets will be realized.
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