XM Radio 2015 Annual Report Download

Download and view the complete annual report

Please find the complete 2015 XM Radio annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 132

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132

Proxy Statement
&

Table of contents

  • Page 1
    Proxy Statement &

  • Page 2

  • Page 3
    ...a major differentiator for SiriusXM. In 2015, we continued to bring new voices to radio, expanded our lineup of exclusive music, comedy, sports, news, and talk programming, and renewed several big programming agreements at the core of our offering. We signed a new far-reaching deal with Howard Stern...

  • Page 4
    ...will provide our listeners every side of the U.S. presidential election, continue to cover every major sporting event, and offer commercial-free music, plus talk, entertainment, comedy and lifestyle radio that is the best in audio entertainment. Increasing Our Presence in New and Used Cars SiriusXM...

  • Page 5
    ...simple to explain: it is a direct function of our diligent focus and execution on our core business and the prudent investments we continue to make to extend our leadership position. In 2016, we expect to grow to approximately 31 million subscribers and generate approximately $4.9 billion of revenue...

  • Page 6

  • Page 7
    ... Date: Place: 9:00 a.m., New York City time, on Tuesday, May 24, 2016 The Auditorium The AXA Equitable Center 787 Seventh Avenue New York, New York 10019 1. To elect the twelve director nominees listed herein; 2. To ratify the appointment of KPMG LLP as our independent registered public accountants...

  • Page 8
    ... of our stock? ...How much stock do our directors and executive officers own? ...Section 16(a) Beneficial Ownership Reporting Compliance ...GOVERNANCE OF THE COMPANY ...How does the board of directors oversee our risk management process? ...What are our policies and procedures for related party...

  • Page 9
    ... at Fiscal Year-End 2015 ...Option Exercises and Stock Vested in 2015 ...Non-Qualified Deferred Compensation...Potential Payments or Benefits Upon Termination or Change-in-Control ...ITEM 2-RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS ...Principal Accountant Fees and Services ...Pre...

  • Page 10

  • Page 11
    ...This proxy statement contains information related to the annual meeting of stockholders of Sirius XM Holdings Inc. to be held on Tuesday, May 24, 2016, beginning at 9:00 a.m., New York City time, in the Auditorium at The AXA Equitable Center, 787 Seventh Avenue, New York, New York 10019, and at any...

  • Page 12
    ... New York City time. What constitutes a quorum? The presence, in person or by proxy, of the holders of a majority of the aggregate voting power of the issued and outstanding shares of our common stock entitled to vote at the annual meeting is necessary to constitute a quorum to transact business...

  • Page 13
    ...annual report to any stockholder residing at an address to which only one copy was mailed. Requests for additional copies for this year's or future years' proxy materials should be directed to: Sirius XM Holdings Inc., Attention: Corporate Secretary, 1221 Avenue of the Americas, 36th Floor, New York...

  • Page 14
    ...proxy materials? To receive free of charge a separate copy of the Notice and, if applicable, this proxy statement and our annual report, stockholders may write or call us at the following: Investor Relations Sirius XM Holdings Inc. 1221 Avenue of the Americas 36th Floor New York, New York 10020 (212...

  • Page 15
    ... to us in writing at our principal executive offices located at: 1221 Avenue of the Americas, 36th Floor, New York, New York 10020, to the attention of the Corporate Secretary, no later than the close of business on December 6, 2016. Our By-laws provide for advance notice provisions. The By-laws...

  • Page 16
    ... Biographical information about this year's nominees: Name Age Position, Principal Occupation, Business Experience and Directorships Joan L. Amble... 62 Ms. Amble has been a director since July 2008. From December 2006 until the closing of our merger with XM Satellite Radio Holdings Inc. ("XM") in...

  • Page 17
    ... as a member of the board of directors of Under Armour, Inc. Key Attributes, Experience and Skills: Mr. Bodenheimer has extensive experience in: marketing, promoting and producing sports and entertainment programming, including live major sporting events; identifying emerging sports properties; and...

  • Page 18
    ... a member of KPMG LLP's Board of Directors. Mr. Carleton previously served as a director of Sirius XM Radio Inc. from January 2013 to September 2013. Mr. Carleton currently serves as a director of Live Nation Entertainment, Inc., Barnes & Noble, Inc., Mobile Streams, Inc. and Air Methods Corporation...

  • Page 19
    ... Corporation and The City of Hope. Key Attributes, Experience and Skills: As the former Chief Executive Officer of DIRECTV, Inc., Mr. Hartenstein has extensive experience in building, managing, marketing and operating a satellite service. He brings direct and highly relevant expertise to the board...

  • Page 20
    ... Incorporated. Mr. Holden also served as 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...

  • Page 21
    ...policy-making positions at Liberty Media, Liberty Interactive Corporation, Liberty TripAdvisor Holdings, Inc., Liberty Broadband Corporation, Oracle, 360networks and Microsoft. He also provides the board with executive leadership perspective on the operations and management of large public companies...

  • Page 22
    ... training, consulting, and product design and prototyping services, since June 2009 and has been an engineering consultant for over five years. Since January 2008, Dr. Malone has served as the owner and manager of a real estate property and management company, 1525 South Street LLC. During 2008, Dr...

  • Page 23
    ... senior management positions at General Electric and RCA. Mr. Meyer serves on the board of ROVI Corporation. Key Attributes, Experience and Skills: As our Chief Executive Officer, Mr. Meyer is responsible for setting and executing our goals and strategies related to our business. Mr. Meyer provides...

  • Page 24
    ... 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 the Chairman of the Archdiocese of New York for Central Westchester, a member of the board of...

  • Page 25
    ... officer in various capacities for companies affiliated with Liberty Media. Mr. Vogel is a member of the board of directors and corporate governance committee of Shaw Communications, Inc., a diversified communications company providing broadband cable and direct-to-home satellite services in Canada...

  • Page 26
    ... five years, Ms. Wittman served as a director of kgb, an independent provider of directory assistance and enhanced information services, and Infospace, an internet search services company. Key Attributes, Experience and Skills: Ms. Wittman has been the chief financial officer of various public and...

  • Page 27
    ... For America's Future, Grupo Televisa, Partnership for New York City and USC Shoah Foundation. He is also a member of the Board of trustees for the Paley Center for Media and the Mt. Sinai Medical Center. Key Attributes, Experience and Skills: Mr. Zaslav, as the Chief Executive Officer of Discovery...

  • Page 28
    ... 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 29
    ... applicable NASDAQ listing standards, Section 10A(m)(3) of the Exchange Act and our Guidelines. Our independent directors meet regularly in executive sessions. What are the current standing committees of the board of directors and who are the members of these committees? Our board of directors has...

  • Page 30
    ...such correspondence that, in 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. 20

  • Page 31
    ... for 2015 The following table provides compensation information for the year ended December 31, 2015 for each of our non-employee directors. Directors who are employees do not receive compensation for their services as directors. Name Fee Earned or Paid in Cash ($) Stock Awards(2) ($) Option Awards...

  • Page 32
    ... business day following the 2015 annual meeting of stockholders. All options to purchase our common stock awarded to our non-employee directors vest over a four-year period, with 25% vesting on each anniversary of the date of grant. Each member also received unrestricted shares of our common stock...

  • Page 33
    ...based upon the information contained in a Schedule 13D/A filed on November 3, 2014 and a Form 4 filed on December 9, 2014 by Liberty Media Corporation and the actual number of shares outstanding, 5,030,502,004, as of February 29, 2016. How much stock do our directors and executive officers own? The...

  • Page 34
    ...throughout the year on information received via 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...

  • Page 35
    ... persons" include executive officers, directors or their immediate family members, or stockholders owning more than five percent of our common stock. Our related person transaction policy requires: • that any transaction in which the Company is a participant, a related person has a material direct...

  • Page 36
    ... 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 37
    ... intend to conduct such advisory vote every three years. The next such vote will be held at our 2017 annual meeting of stockholders. Fiscal Year 2015 Business Highlights We believe that our compensation program for the named executive officers was instrumental in helping us deliver strong financial...

  • Page 38
    ... billion stock buyback program Key Subscriber and Content-Based Achievements in 2015 Added approximately 2.3 million net new subscribers, resulting in a total of approximately 29.6 million subscribers, an increase of over 8% as compared to 2014; Entered into a new twelve-year agreement with Howard...

  • Page 39
    ...We believe this pay mix motivates the named executive officers to achieve goals and objectives that support our business plan and align our executives' interests with those of our stockholders. Compensation in the form of, or based on the value of, our common stock incentivizes executives to enhance...

  • Page 40
    ... executive officer within a particular range related to levels provided by peers. The Compensation Committee attempts to monitor "best practices" and emerging trends in executive compensation, relies on the general business and industry knowledge and experience of its members and occasionally uses...

  • Page 41
    ... Committee in determining annual bonus amounts for the named executive officers, in 2015 the Compensation Committee adopted a bonus plan that measures our performance using various criteria, such as increases in subscribers, revenue, adjusted EBITDA and free cash flow. This plan is used by the...

  • Page 42
    .... Stock Options Stock options have an exercise price equal to the fair market value of our common stock on the date of grant, and therefore reward the executives only if the price of our stock increases after the date of grant Restricted Stock Units The Compensation Committee believes that the use...

  • Page 43
    ...$600,000 in June 2015 Increased from $355,000 to $500,000 in December 2015 Payment of Performance-Based Discretionary Annual Bonuses for 2015 In 2015, the Compensation Committee again adopted, under the Sirius XM Holdings Inc. 2015 Long-Term Stock Incentive Plan, a bonus program designed to qualify...

  • Page 44
    ...our fixed and variable costs; • overseeing our investor relations efforts; • managing our stock buyback program which increased during the year from $6 billion to $8 billion; • supervising our satellite procurement efforts; • overseeing our investment in Sirius XM Canada; and • his efforts...

  • Page 45
    ... Equity Awards at Fiscal Year-End 2015." In June 2015, we entered into a new employment agreement with Mr. Cady upon his appointment as our Executive Vice President, Operations, Products and Connected Vehicle. In connection with his new agreement, we granted Mr. Cady stock options and RSUs in an...

  • Page 46
    ... services Fostering a corporate culture based on quality, creativity, diversity, integrity and innovation Maintaining Sirius XM as one of the largest subscription-based media companies in the United States Other Benefits Provided to Named Executive Officers Retirement and Other Employee Benefits...

  • Page 47
    ... or Benefits Upon Termination or Change in Control-Employment Agreements." None of the employment agreements for the named executive officers provide for any special payments solely due to a change in control. Under the terms of both the Sirius XM Radio Inc. 2009 Long-Term Stock Incentive Plan and...

  • Page 48
    ... such review and discussion, the Compensation Committee recommended to the board of directors that the Compensation Discussion and Analysis be included in this proxy statement and incorporated by reference into our Annual Report on Form 10-K for the fiscal year ended December 31, 2015. Compensation...

  • Page 49
    ... provides information with respect to equity grants made during fiscal year 2015 to the named executive officers. All Other Grant Date All Other Exercise or Stock Awards Fair Value Option Awards: Number of Shares Number of Securities Base Price of of Stock and Of Stock or Units Underlying Options...

  • Page 50
    ... year ended December 31, 2015. (3) Outstanding Equity Awards at Fiscal Year-End 2015 The following table provides information with respect to the status at December 31, 2015 of all unvested RSUs and exercisable and unexercisable stock options awarded to each of the named executive officers. Number...

  • Page 51
    ... at (a) the closing price of the stock at December 31, 2015 multiplied by (b) the number of RSUs that have not vested. Outstanding equity awards for Mr. Meyer vest as follows: options granted at an exercise price of $5.49 vested in four equal annual instalments from the date of grant on February...

  • Page 52
    ..." for 2015. Participation in the Deferred Compensation Plan is available to certain of our senior officers, including our named executive officers. Eligible employees may defer a portion of their annual base salary and/or annual bonus, as applicable, each plan year. Our named executive officers are...

  • Page 53
    ... required by applicable law, regulation or stock exchange listing requirement. James E. Meyer In August 2015, we entered into a new employment agreement with Mr. Meyer to continue to serve as our Chief Executive Officer through April 30, 2018. The employment agreement provides for an increase in Mr...

  • Page 54
    ... potential payments and benefits below. 2009 Sirius XM Radio Inc. Long-Term Stock Incentive Plan and 2015 Sirius XM Holdings Inc. Long-Term Stock Incentive Plan All of our named executive officers had outstanding equity awards as of December 31, 2015 that were granted under the 2009 Sirius XM Radio...

  • Page 55
    ... Benefits The following table describes the potential payments and benefits under the named executive officers' agreements and our stock incentive plans to which they would have been entitled if a termination of employment or change in control had occurred as of December 31, 2015: Severance Payment...

  • Page 56
    ... year are paid to other senior executives of the Company. This potential payment is not determinable and is not reflected in the table above. (5) The amounts do not give effect to the February 2016 amendment to Mr. Cady's employment agreement which is described under "Potential Payments or Benefits...

  • Page 57
    ...• data on audit quality and performance, including recent Public Company Accounting Oversight Board reports on KPMG and its peer firms; • the appropriateness of KPMG's fees for audit and non-audit services, on both an absolute basis and as compared to its peer firms; • KPMG's independence; and...

  • Page 58
    ... sundry expenses. Audit-related fees related to audits of employee benefit plans, internal control compliance, and other attestation services required by contract. Tax services consist of services relating to state and local tax compliance services. All other services are fees for any products or...

  • Page 59
    ... Committee reviewed and discussed, with management and our independent registered public accounting firm, management's annual report on the effectiveness of internal control over financial reporting as of December 31, 2015 and KPMG's related attestation report. The Audit Committee has discussed with...

  • Page 60
    .... Based on the reviews and discussions referred to above, the Audit Committee recommended to the board of directors, and the board approved, that the audited consolidated financial statements be included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015 filed with the SEC...

  • Page 61
    ... Report on Form 10-K for the fiscal year ended December 31, 2015, including financial statements and schedules thereto, are also available without charge to stockholders upon written request addressed to: Investor Relations Sirius XM Holdings Inc. 1221 Avenue of the Americas 36th Floor New York, New...

  • Page 62

  • Page 63
    2015 ANNUAL REPORT

  • Page 64

  • Page 65
    ... Executive Summary We transmit music, sports, entertainment, comedy, talk, news, traffic and weather channels, as well as infotainment services, in the United States on a subscription fee basis through our two proprietary satellite radio systems. Subscribers can also receive music and other channels...

  • Page 66
    ...fees, the sale of advertising on select non-music channels, the direct sale of satellite radios and accessories, and other ancillary services, such as our weather, traffic and data services. In certain cases, a subscription to our radio services is included in the sale or lease price of new vehicles...

  • Page 67
    ... in the daily weighted average number of subscribers and increases in certain of our self-pay subscription rates, partially offset by subscription discounts and limited channel plans offered in customer acquisition and retention programs. • 2014 vs. 2013: For the years ended December 31, 2014 and...

  • Page 68
    ... from the U.S. Music Royalty Fee as the number of subscribers subject to the 12.5% rate increased along with an overall increase in subscribers, by a change in an agreement with a rental car company and the inclusion of a full year of revenue generated by our connected vehicle business. We expect...

  • Page 69
    ...of the benefit to earnings from the amortization of deferred credits on executory contracts initially recognized in purchase price accounting associated with the Merger, greater revenues subject to royalty and/or revenue sharing arrangements, and a 5.6% increase in the statutory royalty rate for the...

  • Page 70
    ...of the benefit to earnings in 2014 from the amortization of deferred credits on executory contracts initially recognized in purchase price accounting associated with the Merger and increased subsidy costs related to a larger number of satellite radio installations in new vehicles. For the year ended...

  • Page 71
    ... year of costs associated with our connected vehicle services business, increased personnel costs, and the elimination of the benefit to earnings in 2014 from the amortization of the deferred credit for acquired executory contracts recognized in purchase price accounting associated with the Merger...

  • Page 72
    ... of our business. Depreciation and Amortization represents the recognition in earnings of the acquisition cost of assets used in operations, including our satellite constellations, property, equipment and intangible assets, over their estimated service lives. • 2015 vs. 2014: For the years ended...

  • Page 73
    ... New York City tax law change resulted in a $14,831 increase in our deferred tax asset during the year ended December 31, 2015. Our effective tax rate for the year ended December 31, 2014 was 40.6% primarily due to the impact of the loss on change in fair value of the derivative related to the share...

  • Page 74
    ...; customer service and billing expenses, per average subscriber; subscriber acquisition cost, or SAC, per installation; free cash flow; and adjusted EBITDA. These measures exclude the impact of sharebased payment expense and certain purchase price accounting adjustments related to the Merger, which...

  • Page 75
    ......Self-pay subscribers ...Paid promotional subscribers...Net additions(a) ...Daily weighted average number of subscribers ...Average self-pay monthly churn ...New vehicle consumer conversion rate ...ARPU...SAC, per installation ...Customer service and billing expenses, per average subscriber...Free...

  • Page 76
    ...in contracts with an automaker and a rental car company. SAC, Per Installation, is derived from subscriber acquisition costs and margins from the sale of radios, components and accessories, excluding purchase price accounting adjustments, divided by the number of satellite radio installations in new...

  • Page 77
    ...The increase was primarily driven by higher net cash provided by operating activities from improved performance, collections from subscribers and distributors, the absence of satellite construction related payments and dividends received from Sirius XM Canada, partially offset by payments related to...

  • Page 78
    ... and subscription-related revenues. We also generate cash from the sale of advertising on certain nonmusic channels and the sale of satellite radios, components and accessories. Our primary uses of cash from operating activities include revenue share and royalty payments to distributors, programming...

  • Page 79
    ... are not directly related to our satellite radio business. Stock Repurchase Program Since December 2012, our board of directors approved for repurchase an aggregate of $8,000,000 of our common stock. Our board of directors did not establish an end date for this stock repurchase program. Shares of...

  • Page 80
    ... 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 performed as of the fourth quarter of each year. Assessments are performed at...

  • Page 81
    ...and liabilities for financial reporting purposes and the amounts used for tax purposes, based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. In determining the period in which related tax benefits are realized for...

  • Page 82
    ... in XM Canada, (ii) recognition of deferred subscriber revenues not recognized in purchase price accounting, and (iii) elimination of the benefit of deferred credits on executory contracts, which are primarily attributable to third party arrangements with an OEM and programming providers. We...

  • Page 83
    ...the Non-GAAP measure. Investors that wish to compare and evaluate our operating results after giving effect for these costs, should refer to net... purchase price accounting adjustments from the Merger and share-based payment expense. We use this Non-GAAP financial measure to manage our business,...

  • Page 84
    ... royalties ...Programming and content ...Customer service and billing ...Satellite and transmission ...Cost of equipment ...Subscriber acquisition costs ...Sales and marketing ...Engineering, design and development General and administrative ...Depreciation and amortization(a) ...Share-based payment...

  • Page 85
    ... royalties ...Programming and content ...Customer service and billing ...Satellite and transmission ...Cost of equipment ...Subscriber acquisition costs ...Sales and marketing ...Engineering, design and development General and administrative ...Depreciation and amortization(a) ...Share-based payment...

  • Page 86
    ... costs and margins from the sale of radios and accessories, excluding purchase price accounting adjustments, divided by the number of satellite radio installations in new vehicles and shipments of aftermarket radios for the period. Purchase price accounting adjustments associated with the Merger...

  • Page 87
    ... contracts recognized at the Merger date attributable to an OEM. SAC, per installation, is calculated as follows: Unaudited For the Years Ended December 31, 2015 2014 2013 Subscriber acquisition costs (GAAP) ...Less: margin from direct sales of radios and accessories (GAAP) ...Add: purchase price...

  • Page 88
    ... and business and market conditions. The following table provides information about our purchases of equity securities registered pursuant to Section 12 of the Exchange Act during the quarter ended December 31, 2015: Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs...

  • Page 89
    ...audited Consolidated Financial Statements of Sirius XM and Holdings. This selected financial data should be read in conjunction with the audited Consolidated Financial Statements and related notes thereto included in this Annual Report and "Management's Discussion and Analysis of Financial Condition...

  • Page 90
    ... financial data for 2013 includes the balances and approximately two months of activity related to the acquisition of the connected vehicle business of Agero, Inc. in November 2013. For the year ended December 31, 2012, we had an income tax benefit of $2,998,234 due to the release of our valuation...

  • Page 91

  • Page 92
    ... in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Sirius XM Holdings Inc...

  • Page 93
    ... Company Accounting Oversight Board (United States), the consolidated balance sheets of Sirius XM Holdings Inc. and subsidiaries as of December 31, 2015 and 2014, and the related consolidated statements of comprehensive income, stockholders' (deficit) equity, and cash flows for each of the years...

  • Page 94
    ...) For the Years Ended December 31, 2015 2014 2013 Revenue: Subscriber revenue ...Advertising revenue ...Equipment revenue ...Other revenue...Total revenue ...Operating expenses: Cost of services: Revenue share and royalties...Programming and content ...Customer service and billing ...Satellite and...

  • Page 95
    SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands, except per share data) ASSETS As of December 31, 2015 2014 Current assets: Cash and cash equivalents ...Receivables, net ...Inventory, net ...Related party current assets ...Deferred tax assets ...Prepaid expenses ...

  • Page 96
    ... Initial fair value of forward contract...- Balance at December 31, 2013 ...Comprehensive income, net of tax ...Share-based payment expense ...Exercise of options and vesting of restricted stock units ...Minimum withholding taxes on net share settlement of stock-based compensation ...Conversion of...

  • Page 97
    ...based payment expense ...Exercise of options and vesting of restricted stock units ...Minimum withholding taxes on net share settlement of stock-based compensation . Issuance of common stock upon exercise of warrants ...Common stock repurchased ...Common stock retired ...Balance at December 31, 2015...

  • Page 98
    ... of derivatives...Share-based payment expense ...Deferred income taxes ...Other non-cash purchase price adjustments ...Changes in operating assets and liabilities: Receivables ...Inventory ...Related party, net ...Prepaid expenses and other current assets ...Other long-term assets...Accounts payable...

  • Page 99
    SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS-(Continued) For the Years Ended December 31, 2015 2014 2013 (in thousands) Cash flows from financing activities: Proceeds from exercise of stock options ...Taxes paid in lieu of shares issued for stock-based ...

  • Page 100
    ... term subscription plans, as well as a multiple subscription discount. We also derive revenue from activation and other fees, the sale of advertising on select non-music channels, the direct sale of satellite radios and accessories, and other ancillary services, such as our weather, traffic and...

  • Page 101
    ... from rental car companies 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 leasing a vehicle with a subscription to our...

  • Page 102
    ... to Revenue share and royalties during the period in which the advertising is transmitted. Equipment revenue and royalties from the sale of satellite radios, components and accessories are recognized upon shipment, net of discounts and rebates. Shipping and handling costs billed to customers are...

  • Page 103
    ... subscription to our service in the sale or lease price of a new vehicle; subsidies paid for chipsets and certain other components used in manufacturing radios; device royalties for certain radios and chipsets; commissions paid to retailers and automakers as incentives to purchase, install and...

  • Page 104
    ...flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. In August 2015, the FASB issued ASU 2015-14 which amended the effective date of this ASU to fiscal years beginning after December...

  • Page 105
    ... average number of common shares outstanding for the potential dilution that could occur if common stock equivalents (convertible debt, preferred stock, warrants, stock options and restricted stock units) were exercised or converted into common stock, calculated using the treasury stock method...

  • Page 106
    ...the sale or lease price of vehicles, as well as billed amounts due from wholesale distributors of our satellite radios. Other receivables primarily include amounts due from manufacturers of our radios, modules and chipsets where we are entitled to subsidies and royalties based on the number of units...

  • Page 107
    ...XM HOLDINGS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (Dollars and shares in thousands, except per share amounts) Receivables, net consists of the following: December 31, 2015 December 31, 2014 Gross customer accounts receivable ...Allowance for doubtful accounts...

  • Page 108
    ... during the years ended December 31, 2015, 2014 and 2013. As of December 31, 2015, the cumulative balance of goodwill impairments recorded since the July 2008 merger (the "Merger") between our wholly owned subsidiary, Vernon Merger Corporation, and XM Satellite Radio Holdings Inc. ("XM"), was $4,766...

  • Page 109
    SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (Dollars and shares in thousands, except per share amounts) licenses authorizes us to use the radio spectrum, which is a renewable, reusable resource that does not deplete or exhaust over time. ASU 2012-...

  • Page 110
    SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (Dollars and shares in thousands, except per share amounts) Depreciation is calculated using the straight-line method over the following estimated useful life of the asset: Satellite system ......

  • Page 111
    ... life. The chart below provides certain information on our operating satellites: Estimated End of Depreciable Life Satellite Description Year Delivered FM-1* ...FM-2* ...FM-3* ...FM-5 ...FM-6 ...XM-3 ...XM-4 ...XM-5 ... 2000 2000 2000 2009 2013 2005 2006 2010 2013 2013 2015 2024 2028 2020 2021...

  • Page 112
    ... our agreements with Sirius XM Canada, we currently receive a percentage-based royalty of 10% and 15% for certain types of subscription revenue earned by Sirius XM Canada for Sirius and XM platforms, respectively; and additional royalties for premium services and royalties for activation fees and...

  • Page 113
    ... share of earnings or losses of Sirius XM Canada as they occur as a component of Other income in our consolidated statements of comprehensive income on a one month lag. This amount included amortization related to the equity method intangible assets of $363 and $1,454 for the years ended...

  • Page 114
    ... material domestic subsidiaries. Interest on borrowings is payable on a monthly basis and accrues at a rate based on LIBOR plus an applicable rate. Sirius XM is also required to pay a variable fee on the average daily unused portion of the Credit Facility which is payable on a quarterly basis. The...

  • Page 115
    ... 31, 2015, 354,569 shares of common stock were reserved for issuance in connection with incentive stock based awards and common stock to be granted to members of our board of directors, employees and third parties. Stock Repurchase Program Since December 2012, our board of directors approved for...

  • Page 116
    SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (Dollars and shares in thousands, except per share amounts) The following table summarizes our share repurchase activity for the years ended: Share Repurchase Type December 31, 2015 Shares Amount ...

  • Page 117
    ... the Sirius XM Holdings Inc. 2015 Long-Term Stock Incentive Plan (the "2015 Plan"). Employees, consultants and members of our board of directors are eligible to receive awards under the 2015 Plan. The 2015 Plan provides for the grant of stock options, restricted stock awards, restricted stock units...

  • Page 118
    ... stock unit entitles the holder to receive one share of common stock upon vesting. As of December 31, 2015, 246,778 shares of common stock were available for future grants under the 2015 Plan. Other Plans We maintain four other share-based benefit plans-the Sirius XM Radio Inc. 2009 Long-Term Stock...

  • Page 119
    SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (Dollars and shares in thousands, except per share amounts) The following table summarizes stock option activity under our share-based plans for the years ended December 31, 2015, 2014 and 2013: Weighted...

  • Page 120
    ... and $2,645 during the years ended December 31, 2015, 2014 and 2013, respectively. Total unrecognized compensation costs related to unvested share-based payment awards for stock options and restricted stock units granted to employees, members of our board of directors and third parties at December...

  • Page 121
    ... into various marketing, sponsorship and distribution agreements to promote our brand and are obligated to make payments to sponsors, retailers, automakers and radio manufacturers under these agreements. Certain programming and content agreements also require us to purchase advertising on properties...

  • Page 122
    SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (Dollars and shares in thousands, except per share amounts) Space Systems/Loral, the manufacturer of certain of our in-orbit satellites, may be entitled to future in-orbit performance payments with ...

  • Page 123
    ...is titled SoundExchange, Inc. v. Sirius XM Radio, Inc., No.13-cv-1290-RJL (D.D.C.), and Determination of Rates and Terms for Preexisting Subscription Services and Satellite Digital Audio Radio Services, United States Copyright Royalty Board, No. 2006-1 CRB DSTRA. Information concerning each of these...

  • Page 124
    ... tax return for all of our wholly-owned subsidiaries, including Sirius XM. Income tax expense consisted of the following: For the Years Ended December 31, 2015 2014 2013 Current taxes: Federal ...State ...Foreign ...Total current taxes...Deferred taxes: Federal ...State ...Total deferred taxes...

  • Page 125
    ... for financial reporting purposes and the amounts used for tax purposes at each year-end, based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. In determining the period in which related tax benefits are realized...

  • Page 126
    SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (Dollars and shares in thousands, except per share amounts) positive and negative evidence, including historical financial performance, scheduled reversal of deferred tax assets and liabilities, ...

  • Page 127
    ... market for an aggregate purchase price of $194,127, including fees and commissions. (19) Quarterly Financial Data-Unaudited Our quarterly results of operations are summarized below: March 31 For the Three Months Ended June 30 September 30 December 31 2015 Total revenue...Cost of services ...Income...

  • Page 128
    SIRIUS XM HOLDINGS 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 2013 Allowance for doubtful accounts ...Deferred tax assets-valuation ...

  • Page 129
    ..., Chief Marketing Officer Joseph A. Verbrugge Executive Vice President, Sales and Development Board of Directors Gregory B. Maffei Chairman of the Board of Sirius XM Holdings Inc. President and CEO Liberty Media Corporation Eddy W. Hartenstein Lead Independent Director of Sirius XM Holdings Inc...

  • Page 130
    ... annual meeting of Sirius XM stockholders is scheduled for 9:00 a.m., New York City time, on Tuesday, May 24, 2016 in the Auditorium at The AXA Equitable Center, 787 Seventh Avenue, New York, New York 10019 Transfer Agent and Registrar The transfer agent and registrar for the Company's common stock...

  • Page 131

  • Page 132