XM Radio 2011 Annual Report Download - page 104

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SIRIUS XM RADIO INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(5) Inventory, net
Inventory consists of finished goods, refurbished goods, chip sets and other raw material components used
in manufacturing radios. Inventory is stated at the lower of cost, determined on a first-in, first-out basis, or
market. We record an estimated allowance for inventory that is considered slow moving, obsolete or whose
carrying value is in excess of net realizable value. The provision related to products purchased for resale in our
direct to consumer distribution channel and components held for resale by us is reported as a component of Cost
of equipment in our consolidated statements of operations. The provision related to inventory consumed in our
OEM and retail distribution channel is reported as a component of Subscriber acquisition costs in our
consolidated statements of operations.
Inventory, net, consists of the following:
December 31,
2011
December 31,
2010
Raw materials ............................................... $24,134 $ 18,181
Finished goods .............................................. 28,007 24,492
Allowance for obsolescence ................................... (15,430) (20,755)
Total inventory, net ........................................ $36,711 $ 21,918
(6) Goodwill
Goodwill represents the excess of the purchase price over the estimated fair value of net tangible and
identifiable intangible assets acquired in business combinations. Our annual impairment assessment is performed
as of October 1st of each year, and an assessment is performed at other times if events or circumstances indicate it
is more likely than not that the asset is impaired. At October 1, 2011 and 2010, the fair value of our single
reporting unit substantially exceeded its carrying value and therefore was not at risk of failing step one of ASC
350-20, Goodwill (“ASC 350-20”). Subsequent to our annual evaluation of the carrying value of goodwill, there
were no events or circumstances that triggered the need for an interim evaluation for impairment. There were no
changes in the carrying value of our goodwill during the years ended December 31, 2011, 2010 and 2009.
F-16