XM Radio 2015 Annual Report Download - page 73

•2015 vs. 2014: For the years ended December 31, 2015 and 2014, the loss on change in
value of derivatives was $0 and $34,485, respectively. The loss in 2014 resulted from a
change in the market value of our common stock to be purchased under the share
repurchase agreement with Liberty Media. On April 25, 2014, we completed the final
purchase installment under this share repurchase agreement and repurchased $340,000 of
our shares of common stock from Liberty Media at a price of $3.66 per share.
•2014 vs. 2013: For the years ended December 31, 2014 and 2013, the loss on change in
value of derivatives was $34,485 and $20,393, respectively. The loss resulted from a change
in the market value of our common stock to be purchased under the share repurchase
agreement with Liberty Media. On April 25, 2014, we completed the final purchase
installment under this share repurchase agreement and repurchased $340,000 of our shares
of common stock from Liberty Media at a price of $3.66 per share.
Other Income primarily includes realized gains and losses, interest income, and our share of
the income or loss of Sirius XM Canada.
•2015 vs. 2014: For the years ended December 31, 2015 and 2014, other income was
$12,379 and $14,611, respectively. Other income for the year ended December 31, 2015 was
driven by dividends received from Sirius XM Canada in excess of our investment. Other
income for the year ended December 31, 2014 was driven by our share of Sirius XM
Canada’s net income and gain from the conversion of certain debentures into shares of
Sirius XM Canada, partially offset by the amortization expense related to our equity method
intangible assets.
•2014 vs. 2013: For the years ended December 31, 2014 and 2013, other income was
$14,611 and $8,180, respectively. The other income for the year ended December 31, 2014
was driven by dividends received from Sirius XM Canada, our share of Sirius XM Canada’s
net income and income from the conversion of certain debentures into shares of Sirius XM
Canada, partially offset by the amortization expense related to our equity method intangible
assets. The other income for 2013 was primarily due to the inclusion of our share of Sirius
XM Canada’s net income, partially offset by the amortization expense related to our equity
method intangible assets.
Income Taxes
Income Tax Expense includes the change in our deferred tax assets, foreign withholding taxes
and current federal and state tax expenses.
•2015 vs. 2014: For the years ended December 31, 2015 and 2014, income tax expense was
$382,240 and $337,545, respectively. Our annual effective tax rate for the year ended
December 31, 2015 was 42.9%, which was impacted by tax law changes in the District of
Columbia and New York City. The tax law change in the District of Columbia will reduce our
future taxes and use less of certain net operating losses in the future. The District of
Columbia tax law change resulted in a $44,392 increase in our valuation allowance during
the year ended December 31, 2015. The tax law change in New York City will increase
certain net operating losses to be utilized in the future. The 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
repurchase agreement with Liberty Media.
•2014 vs. 2013: For the years ended December 31, 2014 and 2013, income tax expense was
$337,545 and $259,877, respectively. Our annual effective tax rate for the year ended
December 31, 2014 was 40.6% primarily due to the $34,485 loss on change in fair value of
the derivatives related to the share repurchase agreement with Liberty Media. Our annual
effective tax rate for the year ended December 31, 2013 was 40.8%, primarily as a result of
non-deductible expenses related to the loss on change in value of derivatives.
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