XM Radio 2000 Annual Report Download - page 38

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XM SATELLiTE RADiO 2000 Annual Report
SFAS No. 138 require that all derivative instruments be recorded on the balance sheet at their respective fair values.
SFAS No. 133 and SFAS No. 138 are effective for all fiscal quarters of all fiscal years beginning after 2000. The
Company will adopt SFAS No. 133 and SFAS No. 138 on January 1, 2001. The Company has reviewed its contracts
and has determined that it has no derivative instruments and does not engage in hedging activities.
(2) Related Party Transactions
The Company had related party transactions with the following shareholders:
(a) Motient
In 1997, Motient contributed $143,000 to the Company to establish the original application for the FCC license.
On March 28, 1997, the Company received $1,500,000 as a capital contribution from Motient. During 1999 and
2000, Motient incurred general and administrative costs and professional fees for the Company and established
an intercompany balance of $62,000 and $63,000, respectively. Effective January 15, 1999, the Company
issued a convertible note maturing on September 30, 2006 to Motient for $21,419,000. (See note 3).
(b) WSI
On March 28, 1997, the Company received $1,500,000 as a capital contribution from WSI. The Company
issued WSI 25 (6,689,250 post split) shares of common stock for this consideration.
During 1997, 1998, and 1999, the Company borrowed $87,911,000, $45,583,000, and $8,953,000, respectively,
under various debt agreements with WSI.
As discussed in note 3, all amounts due to WSI under the debt agreements were acquired by Motient or repaid
on July 7, 1999.
(c) Related Party Services
In addition to financing, the Company has relied upon certain related parties for legal and technical services.
Total expenses incurred in transactions with related parties are as follows (in thousands):
Year ended December 31, 1998
WSI Motient Total
Research and development............$ 6,624 $ —$ 6,624
Professional fees........................... 2,529 353 2,882
General and administrative............. 903 60 963
Total $ 10,056 $ 413 $10,469
Year ended December 31, 1999
WSI Motient Total
Research and development............ $ 50 $ —$ 50
Professional fees........................... —219 219
General and administrative............. — 5 5
Total $ 50 $ 224 $ 274
Year ended December 31, 2000
Motient
Research and development............ $ —
Professional fees........................... 252
General and administrative............. —
Total $ 252
FiNANCiALS 2000
37