XM Radio 2014 Annual Report Download - page 128

We understand that Liberty Media held $11,000 in principal amount of our 7% Exchangeable
Senior Subordinated Notes due 2014 at December 31, 2013, which were converted upon maturity
in December 2014 into 5,974,510 shares of our common stock.
Sirius XM Canada
We hold an equity method investment in Sirius XM Canada. We own approximately 47,300,000
shares of Sirius XM Canada, representing a 37.0% equity interest and a 25.0% voting interest. We
primarily provide programming and content services to Sirius XM Canada.
Investments in which we have the ability to exercise significant influence but not control are
accounted for pursuant to the equity method of accounting. We recognize our proportionate share
of earnings or losses of Sirius XM Canada as they occur as a component of Interest and
investment income in our consolidated statements of comprehensive income on a one month lag.
The difference between our investment and our share of the fair value of the underlying net
assets of Sirius XM Canada is first allocated to either finite-lived intangibles or indefinite-lived
intangibles and the balance is attributed to goodwill. We follow ASC 350, Intangibles—Goodwill and
Other, which requires that equity method finite-lived intangibles be amortized over their estimated
useful life while indefinite-lived intangibles and goodwill are not amortized. The amortization of
equity method finite-lived intangible assets is recorded in Interest and investment income in our
consolidated statements of comprehensive income. We periodically evaluate our equity method
investments to determine if there has been an other-than-temporary decline below carrying value.
Equity method finite-lived intangibles, indefinite-lived intangibles and goodwill are included in the
carrying amount of the investment.
Our related party current asset balances primarily consist of programming and chipset costs
that we are reimbursed for. Our related party long-term asset balances primarily include our
investment balance in Sirius XM Canada. As of December 31, 2014, $2,654 of our investment
balance in Sirius XM Canada related to equity method goodwill and as of December 31, 2013,
$26,161 of our investment balance related to equity method goodwill and intangible assets. Our
related party liabilities as of December 31, 2014 and December 31, 2013 included $2,776 for the
current portion of deferred revenue and $13,415 and $16,190, respectively, for the long-term portion
of deferred revenue recorded as of the Merger date related to agreements with XM Canada, now
Sirius XM Canada. 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 current existing agreements.
We recorded the following revenue and expenses associated with Sirius XM Canada and
Liberty Media which were recorded in our consolidated statements of comprehensive income:
2014 2013 2012
For the Years Ended December 31,
Sirius XM Canada:
Revenue(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $49,691 $ 48,935 $ 39,477
Share of net earnings (losses)(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $15,517 $ 5,865 $ (420)
Liberty Media:
Expenses(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (1,025) $(13,514) $(30,931)
(a) Under our agreements with Sirius XM Canada, we receive a percentage-based royalty for certain
types of subscription revenue earned by Sirius XM Canada for the distribution of Sirius and XM
channels, royalties for activation fees and reimbursements for other charges. We record revenue
from Sirius XM Canada as Other revenue in our consolidated statements of comprehensive
income.
F-22
SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Dollar amounts in thousands, unless otherwise stated)