XM Radio 2015 Annual Report Download - page 72

$31,803, and remained flat as a percentage of total revenue. The increase was primarily
driven by the inclusion of a full year of costs associated with our connected vehicle services
business, as well as higher legal, personnel and facilities costs.
We expect our general and administrative expenses to increase in future periods as a result of,
among other things, enhanced information technology, on-going legal costs and personnel costs to
support the growth 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 December 31, 2015 and 2014, depreciation and
amortization expense was $272,214 and $266,423, respectively, an increase of 2%, or
$5,791, but decreased as a percentage of total revenue. The increase was driven by
additional software placed in-service, partially offset by a reduction of amortization associated
with the stepped-up basis in assets acquired in the Merger (including intangible assets,
property and equipment) through the end of their estimated service lives and certain satellites
reaching the end of their estimated service lives.
•2014 vs. 2013: For the years ended December 31, 2014 and 2013, depreciation and
amortization expense was $266,423 and $253,314, respectively, an increase of 5%, or
$13,109, but decreased as a percentage of total revenue. Depreciation and amortization
expense increased as a result of the inclusion of costs associated with our connected vehicle
services business and additional assets placed in-service, including our FM-6 satellite which
was placed in-service in late 2013. The increase was offset by a reduction of amortization
associated with the stepped-up basis in assets acquired in the Merger (including intangible
assets, satellites, property and equipment) through the end of their estimated useful lives and
certain satellites reaching the end of their estimated useful lives.
Other Income (Expense)
Interest Expense, Net of Amounts Capitalized, includes interest on outstanding debt.
•2015 vs. 2014: For the years ended December 31, 2015 and 2014, interest expense was
$299,103 and $269,010, respectively, an increase of 11%, or $30,093. The increase was
primarily due to higher average debt during the year ended December 31, 2015 compared to
the year ended December 31, 2014. The increase was partially offset by lower average interest
rates resulting from the redemption and conversion of higher interest rate debt during 2014.
•2014 vs. 2013: For the years ended December 31, 2014 and 2013, interest expense was
$269,010 and $204,671, respectively, an increase of 31%, or $64,339. The increase was
primarily due to higher average debt and a reduction in interest capitalized following the
launch of our FM-6 satellite. The increase was partially offset by lower average interest rates
resulting from the redemption or repayment of higher interest rate debt throughout 2013.
We expect interest expense to increase in future periods to the extent the amount of our total
debt outstanding increases.
Loss on Extinguishment of Debt and Credit Facilities, Net, includes losses incurred as a result
of the conversion and retirement of certain debt.
•2015 vs. 2014: There was no loss on extinguishment of debt and credit facilities for the
years ended December 31, 2015 and 2014.
•2014 vs. 2013: For the years ended December 31, 2014 and 2013, loss on extinguishment of
debt and credit facilities, net, was $0 and $190,577, respectively. During the year ended
December 31, 2013, a loss was recorded on the extinguishment of our then outstanding
7.625% Senior Notes due 2018 and 8.75% Senior Notes due 2015.
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 were are accounted
for as a derivative.
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