XM Radio 2001 Annual Report Download - page 45

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43
XM SATELLiTE RADiO 2 001 Annual Report
(c) DIRECTV
In 1999, the Company entered into a consulting services agreement with DIRECTV. The agreement provides for
DIRECTV professionals to aid the Company’s efforts in establishing its customer care center and billing operations
on a time and materials basis.
(d) LCCI
In 1999, the Company entered into the LCCI Services Contract (note 1 5 (e)) and LCCI also provides certain ongoing
consulting engineering work for the Company relating to the terrestrial repeater network on a time and materials basis.
(e) Clear Channel
In 2000, the Company entered into an advertising sales agreement with Premiere Radio Networks, an affiliate
of Clear Channel Communications, pursuant to which Premiere sells to advertisers the time inventory owned by
the Company for advertisements to be run on XM Radio channels. Also in 2000, the Company entered into a
sponsorship agreement with SFX Marketing, now known as Clear Channel Entertainment, pursuant to which the
Company advertises its service at Clear Channel Entertainment events and venues.
(f) Motient
In 1998, the Company entered into an agreement with Motient, in which Motient would provide technical and
administrative support relating to the Company’s operations. Payments for services provided under this agreement
were made based on negotiated hourly rates.
(4) System Under Construction
The Company has capitalized costs related to the development of its XM Radio System to the extent that they have
future benefits. During 2001, the Company placed its Boeing 702 satellites “Rock” and “Roll” into service as well
as its DARS license, ground systems/ spacecraft control facilities, related computer systems, and its terrestrial
repeater network and broadcast facilities by transferring $1,000,228,00 0 from system under construction to property
and equipment. The remaining components in system under construction include the ground spare satellite and
costs incurred through December 31, 2001 for the performance broadcasting studio. The amounts recorded as
system under construction consist of the following (in thousands):
December 3 1,
2000 20 01
DARS license .......................................... $ 140,220 $ —
Satellite system ..................................... 533,155 55,016
Terrestrial system ................................... 8 4,715 —
Spacecraft control facilities ..................... 13,046 —
Broadcast facilities ................................. 27,971 4 0
Computer systems ................................. 15,909 —
$ 815,016 $ 55,056
FiNANCiALS 2001
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