XM Radio 2013 Annual Report Download - page 115

Download and view the complete annual report

Please find page 115 of the 2013 XM Radio annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 136

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136

COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Dollar amounts in thousands, unless otherwise stated)
activation of an XM Canada subscriber on XM’s system. Sirius XM Canada is obligated to pay us a total of
$70,300 for the rights to broadcast and market National Hockey League (“NHL”) games for a ten-year term. We
recognize these payments on a gross basis as a principal obligor pursuant to the provisions of ASC 605, Revenue
Recognition. The estimated fair value of deferred revenue from XM Canada as of the Merger date was
approximately $34,000, which is amortized on a straight-line basis through 2020, the end of the expected term of
the agreements.
We recorded the following revenue from Sirius XM Canada as Other revenue in our consolidated statements
of comprehensive income:
For the Years Ended December 31,
2013 2012 2011*
Royalty income ............................................ $35,411 $31,368 $13,735
Amortization of Sirius XM Canada deferred income ............... 2,776 2,776 1,388
Licensing fee revenue ........................................ 5,012 4,500 3,000
Advertising and other reimbursements .......................... 3,001 833 417
Streaming revenue .......................................... 2,735 — —
Total revenue from Sirius XM Canada ........................ $48,935 $39,477 $18,540
* Sirius XM Canada commenced operations in June 2011.
Our share of net earnings or losses of Sirius XM Canada are recorded to Interest and investment income in
our consolidated statements of comprehensive income on a one month lag. Our share of Sirius XM Canada’s net
income was $7,319, $554 and $1,081 for the years ended December 31, 2013, 2012 and 2011, respectively. We
recorded amortization expense related to the equity method intangible assets of $1,454, $974 and $1,556 for the
years ended December 31, 2013, 2012 and 2011, respectively.
Sirius Canada
We had an equity interest of 49% in Sirius Canada until June 21, 2011 when the Canada Merger closed.
In 2005, we entered into a license and services agreement with Sirius Canada. Pursuant to such agreement,
we were reimbursed for certain costs incurred to provide Sirius Canada service, including certain costs incurred
for the production and distribution of radios, as well as information technology support costs. In consideration for
the rights granted pursuant to this license and services agreement, we had the right to receive a royalty equal to a
percentage of Sirius Canada’s gross revenues based on subscriber levels (ranging between 5% and 15%) and the
number of Canadian-specific channels made available to Sirius Canada.
We recorded the following revenue from Sirius Canada. Royalty income is included in Other revenue and
dividend income is included in Interest and investment income in our consolidated statements of comprehensive
income:
For the Year Ended
December 31,
2011 *
Royalty income ..................................................... $ 9,945
Dividend income .................................................... 460
Total revenue from Sirius Canada ..................................... $10,405
* Sirius Canada combined with XM Canada in June 2011.
F-33