XM Radio 2013 Annual Report Download - page 107

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COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Dollar amounts in thousands, unless otherwise stated)
Accounts receivable, net, consists of the following:
December 31,
2013
December 31,
2012
Gross accounts receivable ..................................... $113,015 $117,853
Allowance for doubtful accounts ................................ (9,078) (11,711)
Total accounts receivable, net ................................ $103,937 $106,142
Receivables from distributors include billed and unbilled amounts due from OEMs for services included in
the sale or lease price of vehicles, as well as billed amounts due from retailers. We have not established an
allowance for doubtful accounts for our receivables from distributors as we have historically not experienced any
significant collection issues with OEMs. Receivables from distributors consist of the following:
December 31,
2013
December 31,
2012
Billed ..................................................... $38,532 $ 53,057
Unbilled ................................................... 50,443 51,368
Total .................................................... $88,975 $104,425
(6) 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 or market. We record an estimated allowance for
inventory that is considered slow moving or 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 comprehensive income. 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
comprehensive income.
Inventory, net, consists of the following:
December 31,
2013
December 31,
2012
Raw materials ............................................... $12,358 $ 17,717
Finished goods .............................................. 15,723 23,779
Allowance for obsolescence ................................... (14,218) (16,159)
Total inventory, net ........................................ $13,863 $ 25,337
(7) Goodwill
Goodwill represents the excess of the purchase price over the estimated fair value of the net tangible and
identifiable intangible assets acquired in business combinations. Our annual impairment assessment is performed
as of the fourth quarter of each year, and an assessment is performed at other times if an event occurs or
circumstances change that would more likely than not reduce the fair value of the asset below its carrying value.
If the carrying value of goodwill exceeds its fair value, an impairment loss is recognized. At the date of our
annual assessment for 2013 and 2012, the fair value of our single reporting unit substantially exceeded its
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