XM Radio 2001 Annual Report Download - page 40

38 XM SATELLiTE RADiO 2 0 0 1 Annual Report
Hughes Electronics Corporation (“Hughes”) terrestrial repeater contract, and certain facility leases and other
secured credits. The interest reserve consists of US Treasury securities and are classified as held-to-maturity
investments. The remaining investments are principally money market funds and certificates of deposit. The
amortized cost, gross unrealized holding gains, gross unrealized holding losses and fair value of the restricted
investments at December 31 , 2000 and 2001, were as follows (in thousands):
Gross Gross
Unrealized Unrealized
Amortized Holding Holding
Cost Gains Losses Fair Value
At December 31, 200 0:
Interest reserve .......................................... $ 106,3 38 $ 1,060 $ —$ 107,398
Contract escrow.......................................... 49,6 92 — —49,692
Collateral for letters of credit
and other secured credit .......................... 5,13 6 — —5,136
$ 161,166 $ 1,060 $ —$ 162,226
At December 31, 200 1:
Interest reserve .......................................... $ 66,020 $ 1,3 54 $ —$ 67,374
Contract escrow.......................................... 2,930 — —2,9 30
Collateral for letters of credit
and other secured credit .......................... 3,80 9 — —3,809
$ 72,759 $ 1,354 $ —$ 74,113
(f) Property and Equipment
Property and equipment are carried at cost less accumulated depreciation and amortization. Equipment under
capital leases is stated at the present value of minimum lease payments. Depreciation and amortization is calculated
using the straight-line method over the following estimated useful lives:
Satellite system, DARS license, and space craft control facilities ........17.5 years
Terrestrial repeater network ............................................................5–1 0 years
Broadcast facilities ..........................................................................3–7 years
Computer systems ..........................................................................3–7 years
Building and improvements ..............................................................20 years
Furniture and fixtures ......................................................................3–7 years
Equipment under capital leases and leasehold improvements..............Lesser of useful life
or remaining lease term
Depreciation of the Company’s in-orbit satellites commenced in May and June 2001 upon their acceptance from
Boeing Satellite Systems International, Inc. (“BSS”). Amortization of the DARS license and depreciation of the
ground systems/ spacecraft control facilities and related computer systems commenced on September 25, 2001,
which was the date the service was launched in the Company’s lead markets. Depreciation of the broadcast
facilities and the terrestrial repeaters commenced when they were placed in service.
The Company accounts for long-lived assets in accordance with the newly adopted provisions of Statement of
Financial Accounting Standards (“SFAS”) No. 1 44, Accounting for the Impairment or Disposal of Long-Lived
Assets. This Statement requires that long-lived assets be reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets
to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows
expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash
flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the
fair value of the asset. Assets to be disposed of are reported at the lower of the carrying amount or fair value
less costs to sell.
AMERiCA’S FiRST SATELLiTE RADiO SERViCE
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