XM Radio 2010 Annual Report Download - page 65

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was incurred on the retirement of our 2.5% Convertible Notes due 2009, the extinguishment of our Term
Loan and Purchase Money Loan with Liberty Media, the repayment of the XM’s Amended and Restated
Credit Agreement due 2011, the partial repayment of XM’s 10% Convertible Senior Notes due 2009 and the
termination of XM’s Second Lien Credit Agreement.
•2009 vs. 2008: For the years ended December 31, 2009 and 2008, loss on extinguishment of debt and credit
facilities, net, was $267,646 and $98,203, respectively, an increase of 173%, or $169,443. During the year
ended December 31, 2009, the loss was incurred on the retirement of our 2.5% Convertible Notes due 2009,
the extinguishment of our Term Loan and Purchase Money Loan with Liberty Media, the repayment of XM’s
Amended and Restated Credit Agreement due 2011, the partial repayment of XM’s 10% Convertible Senior
Notes due 2009 and the termination of XM’s Second Lien Credit Agreement. During the year ended
December 31, 2008, the loss was incurred on the partial induced conversion of our 2.5% Convertible Notes
due 2009.
Interest and Investment Income (Loss) includes realized gains and losses, dividends, interest income, our share
of SIRIUS Canada’s and XM Canada’s net losses and losses recorded from investments in those entities, as well as
debt instruments issued by XM Canada, when the fair value of those instruments falls below carrying value and the
decline is determined to be other than temporary.
•2010 vs. 2009: For the years ended December 31, 2010 and 2009, interest and investment (loss) income
was ($5,375) and $5,576, respectively, a decrease of 196%, or $10,951. The decrease in income was
primarily attributable to higher net losses at XM Canada and SIRIUS Canada and a decrease in payments
received from SIRIUS Canada in excess of the carrying value of our investments, partially offset by the gain
on sale of auction rate securities during the year ended December 31, 2010. In addition, we recorded an
impairment charge on our investment in XM Canada during the year ended December 31, 2009.
•2009 vs. 2008: For the years ended December 31, 2009 and 2008, interest and investment (loss) income
was $5,576 and ($21,428), respectively, an increase of 126%, or $27,004. The increase was attributable to
payments received from SIRIUS Canada in excess of the carrying value of our investment, decreases in our
share of XM Canada’s net loss and decreases in impairment charges related to our investment in XM Canada
for the year ended December 31, 2009 compared to the year ended December 31, 2008, partially offset by
increases in our share of SIRIUS Canada’s net loss, lower interest rates in 2009 and a lower average cash
balance.
Income Taxes
Income Tax Expense primarily represents the deferred tax liability related to the difference in accounting for
our FCC licenses, which are amortized over 15 years for tax purposes but not amortized for book purposes in
accordance with GAAP and foreign withholding taxes on royalty income.
•2010 vs. 2009: For the years ended December 31, 2010 and 2009, income tax expense was $4,620 and
$5,981, respectively, a decrease of 23%, or $1,361 primarily related to a decrease in the applicable tax rate
and foreign withholding taxes on royalty income.
•2009 vs. 2008: For the years ended December 31, 2009 and 2008, income tax expense was $5,981 and
$2,476, respectively, an increase of 142%, or $3,505 primarily related to the inclusion of XM.
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