XM Radio 2010 Annual Report Download - page 64

•2010 vs. 2009: For the years ended December 31, 2010 and 2009, depreciation and amortization expense
was $273,691 and $309,450, respectively, a decrease of 12%, or $35,759 and decreased as a percentage of
total revenue. The decrease was primarily due to a $38,136 reduction in the depreciation of acquired satellite
constellation and amortization of subscriber relationships, partially offset by depreciation recognized on
additional assets placed in-service.
•2009 vs. 2008: For the years ended December 31, 2009 and 2008, depreciation and amortization expense
was $309,450 and $203,752, respectively, an increase of 52%, or $105,698 and increased as a percentage of
total revenue. The increase was primarily due to the impact of the Merger.
We expect depreciation and amortization expenses to increase in future periods as we recognize depreciation
expense on our recently launched satellite, XM-5, and complete the construction and launch of our FM-6 satellite,
which will be partially offset by reduced depreciation and amortization associated with the stepped-up basis in
assets acquired in the Merger (including intangible assets, satellites, property and equipment) through the end of
their estimated service lives, principally through 2017.
Restructuring, Impairments and Related Costs represents charges related to the re-organization of our staff and
restructuring of contracts, as well as charges related to the impairment of assets when those costs are deemed to
provide no future benefit.
•2010 vs. 2009: For the years ended December 31, 2010 and 2009, restructuring, impairments and related
costs was $63,800 and $32,807, respectively, an increase of 94%, or $30,993. The increase was primarily due
to the impairment of our FM-4 satellite, due to the launch of XM-5 in the fourth quarter of 2010, and contract
termination costs in the year ended December 31, 2010 compared to losses incurred on capitalized
installment payments which were expected to provide no future benefit due to the counterparty’s bankruptcy
filing in the year ended December 31, 2009.
•2009 vs. 2008: For the years ended December 31, 2009 and 2008, restructuring, impairments and related
costs was $32,807 and $10,434, respectively, an increase of 214%, or $22,373. The increase was primarily
due to losses incurred on capitalized installment payments which were expected to provide no future benefit
due to the counterparty’s bankruptcy filing in the year ended December 31, 2009 compared to Merger related
restructuring charges in the year ended December 31, 2008.
Other Income (Expense)
Interest Expense, Net of Amounts Capitalized, includes interest on outstanding debt, reduced by interest
capitalized in connection with the construction of our satellites and related launch vehicles.
•2010 vs. 2009: For the years ended December 31, 2010 and 2009, interest expense was $295,643 and
$315,668, respectively, a decrease of 6%, or $20,025. The decrease was primarily due to decreases in the
weighted average interest rate on our outstanding debt in the year ended December 31, 2010 compared to the
year ended December 31, 2009 and the redemption of XM’s 10% Senior PIK Secured Notes due 2011 on
June 1, 2010.
•2009 vs. 2008: For the years ended December 31, 2009 and 2008, interest expense was $315,668 and
$148,455, respectively, an increase of 113%, or $167,213. Interest expense increased significantly as a result
of the Merger, due to additional debt and higher interest rates. Increases in interest expense were partially
offset by the capitalized interest associated with satellite construction and related launch vehicles.
Loss on Extinguishment of Debt and Credit Facilities, Net, includes losses incurred as a result of the conversion
and retirement of certain debt.
•2010 vs. 2009: For the years ended December 31, 2010 and 2009, loss on extinguishment of debt and credit
facilities, net, was $120,120 and $267,646, respectively, a decrease of 55%, or $147,526. During the year
ended December 31, 2010, the loss was incurred on the repayment of our Senior Secured Term Loan due
2012 and 9.625% Senior Notes due 2013 and XM’s 10% Senior PIK Secured Notes due 2011 and
9.75% Senior Notes due 2014, as well as the partial repayment of XM’s 11.25% Senior Secured Notes
due 2013 and our 3.25% Convertible Notes due 2011. During the year ended December 31, 2009, the loss
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