XM Radio 2001 Annual Report Download - page 53

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XM SATELLiTE RADiO 2 001 Annual Report
The Company applies APB 25 in accounting for stock-based compensation for both plans and, accordingly, no
compensation cost has been recognized for its stock options and stock purchase plan in the financial statements other
than for performance based stock options, for options granted with exercise prices below fair value on the date of
grant and for repriced options under FIN No. 44. During 1 999, 2000 and 2001, the Company incurred $4,070,000,
$2,557,000, $2,336 ,000, respectively, in compensation cost for these options. Had the Company determined
compensation cost based on the fair value at the grant date for its stock options under SFAS 123 , the Company’s net
loss and net loss per share would have been increased to the pro forma amounts indicated below (in thousands):
December 3 1,
1999 20 00 20 01
Net loss:
As reported ............................... $3 6,896 $201,338 $30 7,532
Pro forma ................................... 37,706 209,582 323,685
As reported–net loss per share
- basic and diluted ................... (2.40) (4.1 5) (5.13)
Pro forma–net loss per share
- basic and diluted ................... (2.62) (4.3 2) (5.40)
Talent Option Plan
In May 2000, the Company adopted the XM Talent Option Plan (‘‘Talent Plan’’) under which non-employee programming
consultants to the Company may be granted options to purchase shares of Class A common stock of the Company.
The Company authorized 500,000 shares of Class A common stock under the Talent Plan. The options are
exercisable in installments determined by the talent committee of the Company’s board of directors. The options
expire as determined by the talent committee, but no later than ten years from the date of the grant. As of
December 31, 2000 and 2001, no and 144,500 options had been granted under the Talent Plan. In 2001, the
Company recognized $575,000 in non-cash compensation expense related to these options under SFAS 123 .
At December 31, 2001, there were 355 ,500 options available under the plan for future grant.
(11) Profit Sharing and Employee Savings Plan
On July 1, 1998, the Company adopted a profit sharing and employee savings plan under Section 401(k) of the
Internal Revenue Code. This plan allows eligible employees to defer up to 15% of their compensation on a pre-tax
basis through contributions to the savings plan. The Company contributed $0.50 in 1999, 2000 and 2001 for
every dollar the employees contributed up to 6% of compensation, which amounted to $164,0 00, $229,000
and $543,000, respectively.
(12) Interest Cost
The Company capitalizes a portion of interest cost as a component of the cost of the XM Radio System. The following
is a summary of interest cost incurred during December 31, 1999, 2 000 and 20 01 (in thousands):
1999 20 00 20 01
Interest cost capitalized ....................... $1 5,343 $39,052 $45,211
Interest cost charged to expense........... 9,121 —18,131
Total interest cost incurred ................... $24,464 $3 9,052 $63,342
The Company exceeded its capitalization threshold by $3,600,00 0 and incurred a charge to interest of $5,520,000
for the beneficial conversion feature of a related party note in 1999 and by $1 8,131,000 in 2001.
FiNANCiALS 2001
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