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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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FOR THE FISCAL YEAR ENDED DECEMBER 31, 2014
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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FOR THE TRANSITION PERIOD FROM __________ TO ________
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Delaware
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38-3916511
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer Identification Number)
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1221 Avenue of the Americas, 36th Floor
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New York, New York
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10020
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(Address of principal executive offices)
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(Zip Code)
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Title of Each Class:
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Name of Each Exchange on Which Registered:
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Common Stock, par value $0.001 per share
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The Nasdaq Global Select Market
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Large accelerated filer
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Accelerated filer
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Non-accelerated filer
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Smaller reporting company
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(Do not check if a smaller reporting company)
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Item No.
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Description
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subscribers under our regular and discounted pricing plans;
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subscribers that have prepaid, including payments made or due from automakers for subscriptions included in the sale or lease price of a vehicle;
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subscribers to our Internet services who do not also have satellite radio subscriptions; and
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certain subscribers to our weather, traffic, data and Backseat TV services who do not also have satellite radio subscriptions.
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an extensive selection of music genres, ranging from rock, pop and hip-hop to country, dance, jazz, Latin and classical;
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live play-by-play sports from major leagues and colleges;
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a multitude of talk and entertainment channels for a variety of audiences;
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a wide range of national, international and financial news; and
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local traffic and weather reports for 21 metropolitan markets throughout the United States.
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satellites, terrestrial repeaters and other satellite facilities;
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•
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studios; and
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radios.
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the licensing of our satellite systems;
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preventing interference with or to other users of radio frequencies; and
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compliance with FCC rules established specifically for U.S. satellites and satellite radio services.
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Name
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Age
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Position
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James E. Meyer
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60
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Chief Executive Officer
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Scott A. Greenstein
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55
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President and Chief Content Officer
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Dara F. Altman
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56
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Executive Vice President and Chief Administrative Officer
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Stephen Cook
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59
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Executive Vice President, Sales and Automotive
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Patrick L. Donnelly
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53
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Executive Vice President, General Counsel and Secretary
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David J. Frear
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58
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Executive Vice President and Chief Financial Officer
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Enrique Rodriguez
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52
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Executive Vice President, Operations and Products
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Katherine Kohler Thomson
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48
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Executive Vice President, Chief Marketing Officer
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ITEM 1A.
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RISK FACTORS
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•
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the production and sale or lease of new vehicles in the United States;
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the price of our service;
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the health of the economy;
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the rate at which existing self-pay subscribers buy and sell new and used vehicles in the United States;
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our ability to convince owners and lessees of new and previously owned vehicles that include satellite radios to purchase subscriptions to our service;
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•
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the effectiveness of our marketing programs;
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•
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the entertainment value of our programming; and
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•
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actions by our competitors, such as terrestrial radio and other audio entertainment and information providers.
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the value consumers perceive in our service;
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•
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our ability to add and retain compelling programming;
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the increasing competition we experience from terrestrial and Internet radio and other audio entertainment and information providers;
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•
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our ability to increase prices; and
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discounted offers we may make to attract new subscribers and retain existing subscribers.
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degradation and durability of solar panels;
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quality of construction;
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random failure of satellite components, which could result in significant damage to or loss of a satellite;
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amount of fuel the satellite consumes; and
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damage or destruction by electrostatic storms, collisions with other objects in space or other events, such as nuclear detonations, occurring in space.
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•
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manufacturers that build and distribute satellite radios;
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companies that manufacture and sell integrated circuits for satellite radios;
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programming providers and on-air talent;
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vendors that operate our call centers;
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retailers that market and sell satellite radios and promote subscriptions to our services; and
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vendors that have designed or built, and vendors that support or operate, other important elements of our systems.
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Location
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Purpose
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Own/Lease
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New York, NY
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Corporate headquarters and studio/production facilities
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Lease
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New York, NY
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Office facilities
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Lease
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Washington, DC
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Office and studio/production facilities
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Own
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Washington, DC
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Office facilities and data center
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Own
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Lawrenceville, NJ
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Office and technical/engineering facilities
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Lease
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Deerfield Beach, FL
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Office and technical/engineering facilities
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Lease
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Farmington Hills, MI
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Office and technical/engineering facilities
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Lease
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Nashville, TN
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Studio/production facilities
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Lease
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Vernon, NJ
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Technical/engineering facilities
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Own
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Ellenwood, GA
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Technical/engineering facilities
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Lease
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Los Angeles, CA
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Studio/production facilities
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Lease
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Irving, TX
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Office and engineering facilities/call center
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Lease
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High
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Low
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Year Ended December 31, 2013
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First Quarter
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$3.25
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$2.95
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Second Quarter
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$3.63
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$2.95
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Third Quarter
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$3.99
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$3.30
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Fourth Quarter
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$4.18
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$3.32
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Year Ended December 31, 2014
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First Quarter
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$3.89
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$3.09
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Second Quarter
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$3.49
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$2.98
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Third Quarter
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$3.65
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$3.28
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Fourth Quarter
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$3.63
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$3.14
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Period
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Total Number of Shares Purchased
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Average Price Paid Per Share (a)
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Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
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Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (a)
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October 1, 2014 - October 31, 2014
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55,907,961
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(b)
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55,907,961
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$
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2,110,339,265
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November 1, 2014 - November 30, 2014
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49,014,354
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$
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3.52
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49,014,354
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$
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1,938,003,842
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December 1, 2014 - December 31, 2014
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64,039,114
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$
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3.49
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64,039,114
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$
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1,714,807,515
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Total
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168,961,429
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(b)
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168,961,429
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(a)
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These amounts include fees and commissions associated with shares repurchased. All of these repurchases were made pursuant to our share repurchase program.
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(b)
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In August 2014, we prepaid $250 million under an accelerated share repurchase agreement which settled on October 1, 2014 at which time we received 19.4 million shares of our common stock. In addition, during October 2014, we purchased 36.5 million shares of our common stock on the open market at an average price of $3.33 per share. See Note 15 to the consolidated financial statements included in this Annual Report on Form 10-K.
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NASDAQ Telecommunications Index
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S&P 500 Index
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Sirius XM Holdings Inc.
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December 31, 2009
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$100.00
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$100.00
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$100.00
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December 31, 2010
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$103.92
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$112.78
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$271.67
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December 31, 2011
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$90.81
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$112.78
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$303.33
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December 31, 2012
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$92.63
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$127.90
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$481.67
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December 31, 2013
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$114.88
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$165.76
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$581.67
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December 31, 2014
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$125.11
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$184.64
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$583.33
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As of and for the Years Ended December 31,
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2014
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2013 (1)
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2012 (2)
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2011
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2010
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(in thousands, except per share data)
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Statements of Comprehensive Income Data:
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Total revenue
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$
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4,181,095
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$
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3,799,095
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$
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3,402,040
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$
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3,014,524
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$
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2,816,992
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Net income
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$
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493,241
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$
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377,215
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$
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3,472,702
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$
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426,961
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$
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43,055
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Net income per share – basic
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$
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0.09
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$
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0.06
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$
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0.55
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$
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0.07
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$
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0.01
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Net income per share – diluted
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$
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0.08
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$
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0.06
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$
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0.51
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$
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0.07
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$
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0.01
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Weighted average common shares outstanding – basic
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5,788,944
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6,227,646
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4,209,073
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3,744,606
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3,693,259
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Weighted average common shares outstanding – diluted
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5,862,020
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6,384,791
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6,873,786
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6,500,822
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6,391,071
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Cash dividends per share
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$
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—
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$
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—
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$
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0.05
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$
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—
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$
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—
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Balance Sheet Data:
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Cash and cash equivalents
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$
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147,724
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$
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134,805
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$
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520,945
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$
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773,990
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$
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586,691
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Restricted investments
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$
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5,922
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$
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5,718
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$
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3,999
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$
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3,973
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$
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3,396
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Total assets
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$
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8,375,509
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$
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8,844,780
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$
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9,054,843
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$
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7,495,996
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$
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7,383,086
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Long-term debt, net of current portion
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$
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4,493,863
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$
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3,093,821
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$
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2,430,986
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$
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3,012,351
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$
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3,021,763
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Stockholders' equity
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$
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1,309,837
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$
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2,745,742
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|
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$
|
4,039,565
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$
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704,145
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$
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207,636
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(1)
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The selected financial data for 2013 includes the balances and approximately two months of activity related to the acquisition of the connected vehicle business of Agero, Inc. in November 2013.
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(2)
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For the year ended December 31, 2012, we had an income tax benefit of $2,998,234 due to the release of our valuation allowance. A special cash dividend was paid during 2012.
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•
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2014 vs. 2013
: For the
years ended
December 31, 2014
and
2013
, subscriber revenue was
$3,554,302
and
$3,284,660
, respectively,
an increase
of
8%
, or
$269,642
. The increase was primarily attributable to a 6% increase in the daily weighted average number of subscribers, the inclusion of a full year of subscription revenue generated by our connected vehicle business and the increase in certain of our subscription rates beginning in January 2014. These increases were partially offset by subscription discounts and limited channel line-up plans offered through customer acquisition and retention programs, a change in an agreement with an automaker and a rental car company, and an increasing number of lifetime subscription plans that have reached full revenue recognition.
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•
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2013 vs. 2012:
For the years ended December 31, 2013 and 2012, subscriber revenue was
$3,284,660
and
$2,962,665
, respectively,
an increase
of
11%
, or
$321,995
. The increase was primarily attributable to a 9% increase in the daily weighted average number of subscribers, the impact of the increase in certain of our subscription rates beginning in January 2012 as more subscribers migrated to the higher rates, and an increase in subscriptions to premium services, premier channels and Internet streaming, as well as the inclusion of connected vehicle subscription revenue in 2013. These increases were partially offset by subscription discounts offered through customer acquisition and retention programs, and an increasing number of lifetime subscription plans that have reached full revenue recognition.
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•
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2014 vs. 2013
: For the
years ended
December 31, 2014
and
2013
, advertising revenue was
$100,982
and
$89,288
, respectively,
an increase
of
13%
, or
$11,694
. The increase was primarily due to a greater number of advertising spots sold and broadcast, as well as increases in rates charged per spot.
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•
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2013 vs. 2012
: For the years ended December 31, 2013 and 2012, advertising revenue was
$89,288
and
$82,320
, respectively,
an increase
of
8%
, or
$6,968
. The increase was primarily due to a greater number of advertising spots sold and broadcast, as well as increases in rates charged per spot.
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•
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2014 vs. 2013
: For the
years ended
December 31, 2014
and
2013
, equipment revenue was
$104,661
and
$80,573
, respectively,
an increase
of
30%
, or
$24,088
. The increase was driven by higher sales to distributors and royalties from OEM production, partially offset by lower per unit revenue on direct to consumer sales.
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•
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2013 vs. 2012
: For the years ended December 31, 2013 and 2012, equipment revenue was
$80,573
and
$73,456
, respectively,
an increase
of
10%
, or
$7,117
. The increase was driven by royalties from higher OEM production, the mix of royalty eligible radios and, to a lesser extent, improved aftermarket subsidies.
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•
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2014 vs. 2013
: For the
years ended
December 31, 2014
and
2013
, other revenue was
$421,150
and
$344,574
, respectively,
an increase
of
22%
, or
$76,576
. The increase was driven by revenues from the U.S. Music Royalty Fee as the number of subscribers subject to the 12.5% rate increased along with an overall increase in subscribers, by a change in an agreement with a rental car company and the inclusion of a full year of other revenue generated by our connected vehicle business.
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•
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2013 vs. 2012
: For the years ended December 31, 2013 and 2012, other revenue was
$344,574
and
$283,599
, respectively,
an increase
of
22%
, or
$60,975
. The increase was driven by revenues from the U.S. Music Royalty Fee as the number of subscribers increased and subscribers on the 12.5% rate increased, and higher royalty revenue from Sirius XM Canada.
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•
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2014 vs. 2013
: For the
years ended
December 31, 2014
and
2013
, revenue share and royalties were
$810,028
and
$677,642
, respectively,
an increase
of
20%
, or
$132,386
, and
increased
as a percentage of total revenue. The increase was primarily attributable to the elimination of the benefit to earnings from the amortization of deferred credits on executory contracts initially recognized in purchase price accounting associated with the Merger, greater revenues subject to royalty and/or revenue sharing arrangements, and a 5.6% increase in the statutory royalty rate for the performance of sound recordings. For the
year ended
December 31, 2013
, revenue share and royalties was positively impacted by a benefit of
$122,534
to earnings from the amortization of deferred credits on executory contracts associated with the Merger.
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•
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2013 vs. 2012
: For the years ended December 31, 2013 and 2012, revenue share and royalties were
$677,642
and
$551,012
, respectively,
an increase
of
23%
, or
$126,630
, and
increased
as a percentage of total revenue. The increase was primarily attributable to greater revenues subject to royalty and/or revenue sharing arrangements and a 12.5% increase in the statutory royalty rate for the performance of sound recordings as well as a decrease in the benefit to earnings from the amortization of deferred credits on executory contracts initially recognized in purchase price accounting associated with the Merger.
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•
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2014 vs. 2013
: For the
years ended
December 31, 2014
and
2013
, programming and content expenses were
$297,313
and
$290,323
, respectively,
an increase
of
2%
, or
$6,990
, but
decreased
as a percentage of total revenue. The increase was primarily due to higher personnel costs, the reduction in the benefit to earnings from the purchase price accounting adjustments associated with the Merger and the early termination of certain agreements, partially offset by the renewal of certain licensing agreements at more cost effective terms.
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•
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2013 vs. 2012
: For the years ended December 31, 2013 and 2012, programming and content expenses were
$290,323
and
$278,997
, respectively,
an increase
of
4%
, or
$11,326
, but
decreased
as a percentage of total revenue. The increase was primarily due to reductions in the benefit to earnings from purchase price accounting adjustments associated with the Merger attributable to the amortization of the deferred credit on acquired programming executory contracts and increased personnel costs.
|
•
|
2014 vs. 2013
: For the
years ended
December 31, 2014
and
2013
, customer service and billing expenses were
$370,585
and
$320,755
, respectively,
an increase
of
16%
, or
$49,830
, and
increased
as a percentage of total revenue. The increase was primarily due to the inclusion of a full year of costs associated with our connected vehicle services business, higher subscriber volume driving increased subscriber contacts and increased bad debt expense.
|
•
|
2013 vs. 2012
: For the years ended December 31, 2013 and 2012, customer service and billing expenses were
$320,755
and
$294,980
, respectively,
an increase
of
9%
, or
$25,775
, but remained flat as a percentage of total revenue. The increase was primarily due to efforts to improve our customer service experience, resulting in higher spend on customer service agents, staffing and training, higher subscriber volume driving increased subscriber contacts, increased bad debt expense and higher technology costs.
|
•
|
2014 vs. 2013
: For the
years ended
December 31, 2014
and
2013
, satellite and transmission expenses were
$86,013
and
$79,292
, respectively,
an increase
of
8%
, or
$6,721
, but
remained flat
as a percentage of total revenue. The increase was primarily due to increased personnel costs, costs associated with our Internet streaming operations, satellite insurance expense, and terrestrial repeater network costs.
|
•
|
2013 vs. 2012
: For the years ended December 31, 2013 and 2012, satellite and transmission expenses were
$79,292
and
$72,615
, respectively,
an increase
of
9%
, or
$6,677
, but
remained flat
as a percentage of total revenue. The increase was primarily due to increased costs associated with our Internet streaming operations.
|
•
|
2014 vs. 2013
: For the
years ended
December 31, 2014
and
2013
, cost of equipment was
$44,397
and
$26,478
, respectively,
an increase
of
68%
, or
$17,919
, and
increased
as a percentage of equipment revenue. The increase was primarily due to higher sales to distributors, partially offset by lower costs per unit on direct to consumer sales.
|
•
|
2013 vs. 2012:
For the years ended December 31, 2013 and 2012, cost of equipment was
$26,478
and
$31,766
, respectively,
a decrease
of
17%
, or
$5,288
, and
decreased
as a percentage of equipment revenue. The decrease was primarily due to lower average cost per product sold and lower inventory reserves, partially offset by higher direct to consumer volume compared to prior year periods.
|
•
|
2014 vs. 2013
: For the
years ended
December 31, 2014
and
2013
, subscriber acquisition costs were
$493,464
and
$495,610
, respectively,
a decrease
of
$2,146
, and
decreased
as a percentage of total revenue. Improved OEM subsidy rates per vehicle and a change in a contract with an automaker decreased subscriber acquisition costs. The decrease was partially offset by the elimination of the benefit to earnings in 2014 from the amortization of deferred credits on executory contracts initially recognized in purchase price accounting associated with the Merger and increased subsidy costs related to a larger number of satellite radio installations in new vehicles. For the
year ended
December 31, 2013
, the benefit to earnings from amortization of deferred credits was
$64,365
.
|
•
|
2013 vs. 2012
: For the years ended December 31, 2013 and 2012, subscriber acquisition costs were
$495,610
and
$474,697
, respectively,
an increase
of
4%
, or
$20,913
, but
decreased
as a percentage of total revenue. The increase was primarily a result of higher subsidies related to increased OEM installations and lower benefit to earnings from the amortization of the deferred credit for acquired executory contracts recognized in purchase price accounting associated with the Merger, partially offset by improved OEM subsidy rates per vehicle.
|
•
|
2014 vs. 2013
: For the
years ended
December 31, 2014
and
2013
, sales and marketing expenses were
$336,480
and
$291,024
, respectively,
an increase
of
16%
, or
$45,456
, and
increased
as a percentage of total revenue. The increase was primarily due to additional subscriber communications and retention programs associated with a greater number of subscribers and promotional trials, the inclusion of a full year of costs associated with our connected vehicle services business, increased personnel costs, and the elimination of the benefit to earnings in 2014 from the amortization of the deferred credit for acquired executory contracts recognized in purchase price accounting associated with the Merger; partially offset by lower loyalty costs due a change in a contract with an automaker. The benefit to earnings from the amortization of the deferred credit for acquired executory contracts for the
year ended
December 31, 2013
was
$12,922
.
|
•
|
2013 vs. 2012
: For the years ended December 31, 2013 and 2012, sales and marketing expenses were
$291,024
and
$248,905
, respectively,
an increase
of
17%
, or
$42,119
, and
increased
as a percentage of total revenue. The increase was primarily due to additional subscriber communications and retention programs associated with a greater number of subscribers and promotional trials.
|
•
|
2014 vs. 2013
: For the
years ended
December 31, 2014
and
2013
, engineering, design and development expenses were
$62,784
and
$57,969
, respectively,
an increase
of
8%
, or
$4,815
, but
remained flat
as a percentage of total revenue. The increase was driven primarily by the inclusion of a full year of costs associated with our connected vehicle services business and higher personnel costs.
|
•
|
2013 vs. 2012
: For the years ended December 31, 2013 and 2012, engineering, design and development expenses were
$57,969
and
$48,843
, respectively,
an increase
of
19%
, or
$9,126
, but remained flat as a percentage of total revenue. The increase was driven primarily by higher product development costs, costs related to enhanced subscriber features and functionality for our service, and by the reversal of certain non-recurring engineering charges that were recorded in the second quarter of 2012.
|
•
|
2014 vs. 2013
: For the
years ended
December 31, 2014
and
2013
, general and administrative expenses were
$293,938
and
$262,135
, respectively,
an increase
of
12%
, or
$31,803
, and
remained flat
as a percentage of total revenue. The increase was primarily driven by the inclusion of a full year of costs associated with our connected vehicle services business, as well as higher legal, personnel and facilities costs.
|
•
|
2013 vs. 2012
: For the years ended December 31, 2013 and 2012, general and administrative expenses were
$262,135
and
$261,905
, respectively,
an increase
of less than 1%, or
$230
, but
decreased
as a percentage of total revenue. The increase was primarily due to higher information technology costs, offset by lower legal costs.
|
•
|
2014 vs. 2013
: For the
years ended
December 31, 2014
and
2013
, depreciation and amortization expense was
$266,423
and
$253,314
, respectively,
an increase
of
5%
, or
$13,109
, but
decreased
as a percentage of total revenue. Depreciation and amortization expense increased as a result of the inclusion of costs associated with our connected vehicle services business and additional assets placed in-service, including our FM-6 satellite which was placed in-service in late 2013. The increase was offset by a reduction of amortization associated with the stepped-up basis in assets acquired in the Merger (including intangible assets, satellites, property and equipment) through the end of their estimated useful lives and certain satellites reaching the end of their estimated useful lives.
|
•
|
2013 vs. 2012
: For the years ended December 31, 2013 and 2012, depreciation and amortization expense was
$253,314
and
$266,295
, respectively,
a decrease
of
5%
, or
$12,981
, and
decreased
as a percentage of total revenue. The decrease was driven by certain satellites reaching the end of their estimated useful lives, partially offset by additional assets placed in-service.
|
•
|
2014 vs. 2013
: For the
years ended
December 31, 2014
and
2013
, interest expense was
$269,010
and
$204,671
, respectively,
an increase
of
31%
, or
$64,339
. The increase was primarily due to higher average debt and a reduction in interest capitalized following the launch of our FM-6 satellite. The increase was partially offset by lower average interest rates resulting from the redemption or repayment of higher interest rate debt throughout 2013.
|
•
|
2013 vs. 2012
: For the years ended December 31, 2013 and 2012, interest expense was
$204,671
and
$265,321
, respectively,
a decrease
of
23%
, or
$60,650
. The decrease was primarily due to lower average interest rates resulting from the redemption or repayment of $2,535,500 of higher interest rate debt throughout 2012 and 2013, which was replaced with $2,650,000 of lower interest rate debt.
|
•
|
2014 vs. 2013
: For the
years ended
December 31, 2014
and
2013
, loss on extinguishment of debt and credit facilities, net, was
$0
and
$190,577
, respectively. During the
year ended
December 31, 2013
, a loss was recorded on the extinguishment of our then outstanding 7.625% Senior Notes due 2018 and 8.75% Senior Notes due 2015.
|
•
|
2013 vs. 2012
: For the year ended December 31, 2013, loss on extinguishment of debt and credit facilities, net, was
$190,577
. The loss in 2013 was recorded on the extinguishment of our 7.625% Senior Notes due 2018 and our 8.75% Senior Notes due 2015. During the year ended December 31, 2012, a
$132,726
loss was recorded on the extinguishment of our 13% Senior Notes due 2013 and our 9.75% Senior Secured Notes due 2015.
|
•
|
2014 vs. 2013
: For the
years ended
December 31, 2014
and
2013
, interest and investment income was
$15,498
and
$6,976
, respectively. The income for the year ended December 31, 2014 was driven by the dividends received from Sirius XM Canada, our share of Sirius XM Canada's net income and income from the conversion of certain debentures into shares of Sirius XM Canada, partially offset by the amortization expense related to our equity method intangible assets. The interest and investment income for 2013 was primarily due to the inclusion of our share of Sirius XM Canada's net income, partially offset by the amortization expense related to our equity method intangible assets.
|
•
|
2013 vs. 2012
: For the year ended December 31, 2013, interest and investment income was
$6,976
compared to
$716
in 2012. The interest and investment income for 2013 and 2012 was primarily due to our share of Sirius XM Canada's net income, partially offset by the amortization expense related to our equity method intangible assets.
|
•
|
2014 vs. 2013
: For the
years ended
December 31, 2014
and
2013
, the loss on change in value of derivatives was
$34,485
and
$20,393
, respectively. The loss resulted from a change in the market value of our common stock to be purchased under the share repurchase agreement with Liberty Media. On April 25, 2014, we completed the final purchase installment under this share repurchase agreement and repurchased
$340,000
of our shares of common stock from Liberty Media at a price of
$3.66
per share.
|
•
|
2013 vs. 2012
: For the year ended December 31, 2013, net loss on change in value of derivatives was
$20,393
which resulted from the change in value of the shares to be repurchased under the share repurchase agreement with Liberty Media.
|
•
|
2014 vs. 2013
: For the
years ended
December 31, 2014
and
2013
, income tax expense was
$337,545
and
$259,877
, respectively. Our annual effective tax rate for the
year ended
December 31, 2014
was
41%
. The primary driver for the increase over the statutory rate is related to the
$34,485
loss on the change in fair value of the derivative related to the share repurchase agreement with Liberty Media.
|
•
|
2013 vs. 2012
: For the year ended December 31, 2013, income tax expense was
$259,877
compared to an income tax benefit of
$2,998,234
for 2012. Our annual effective tax rate for the year ending December 31, 2013 was 41%. The primary driver for the increase over the statutory rate is a result of
$9,545
of non-deductible expenses, primarily related to the loss on change in value of derivatives. For the year ended December 31, 2012, we released $3,195,651 of valuation allowance due to the cumulative positive evidence that it is more likely than not that our deferred tax assets will be realized.
|
•
|
2014 vs. 2013
: For the
years ended
December 31, 2014
and
2013
, net additions were
1,751,777
and
1,658,974
, respectively, an increase of
6%
, or
92,803
. An increase in paid promotional subscribers in 2014 compared to 2013 was partially offset by a slight decline in self-pay net additions for the same period. The increase in paid promotional net additions was due to a growth in sales by automakers offering paid trial subscriptions. Self-pay net additions declined slightly in 2014 compared to 2013 as record new and used car conversions were offset by an increase in churn associated with our larger subscriber base. The increase in churn was primarily attributed to an increase in existing self-pay subscribers migrating to unpaid trials.
|
•
|
2013 vs. 2012
: For the
years ended
December 31, 2013
and
2012
, net additions were
1,658,974
and
2,007,512
, respectively, a decrease of
17%
, or
348,538
. Self-pay net additions declined in 2013 compared to 2012 primarily due to higher vehicle turnover rates. Paid promotional net additions declined, in part, as a result of a change from a paid trial to an unpaid trial in the fourth quarter of 2013 pursuant to an agreement with an OEM, resulting in a substantial volume of paid promotional trial deactivations without the corresponding paid trial starts in the same period.
|
•
|
2014 vs. 2013
: For the
years ended
December 31, 2014
and
2013
, our average self-pay monthly churn rate was
1.9%
and
1.8%
, respectively. The increase was due to increased vehicle related churn associated with existing self-pay subscribers migrating to unpaid trials, offset by improvements in voluntary churn.
|
•
|
2013 vs. 2012
: For the
years ended
December 31, 2013
and
2012
, our average self-pay monthly churn rate was
1.8%
and
1.9%
, respectively. The decrease was due to a higher mix of existing subscribers migrating to paid trials in new vehicles which are not included in average self-pay churn.
|
•
|
2014 vs. 2013
: For the
years ended
December 31, 2014
and
2013
, the new vehicle consumer conversion rate was
41%
and
44%
, respectively. The decrease in the new vehicle consumer conversion rate was primarily due to an increased penetration rate and lower conversion of first-time satellite enabled car buyers and lessees.
|
•
|
2013 vs. 2012
: For the
years ended
December 31, 2013
and
2012
, the new vehicle consumer conversion rate was
44%
and
45%
, respectively. The decrease in the new vehicle consumer conversion rate was primarily due to the mix of sales by OEMs.
|
•
|
2014 vs. 2013
: For the
years ended
December 31, 2014
and
2013
, ARPU was
$12.38
and
$12.23
, respectively. The increase was driven primarily by the contribution of the U.S. Music Royalty Fee, and the impact of the increase in certain of our subscription rates beginning in January 2014. The positive result was partially offset by growth in subscription discounts and limited channel line-up plans offered through our customer acquisition and retention programs, lifetime subscription plans that have reached full revenue recognition and changes in contracts with an automaker and a rental car company.
|
•
|
2013 vs. 2012
: For the
years ended
December 31, 2013
and
2012
, ARPU was
$12.23
and
$12.00
, respectively. The increase was driven primarily by the contribution of the U.S. Music Royalty Fee, the impact of the increase in certain of our subscription rates beginning in January 2012, and an increase in subscriptions to premium services, partially offset by subscription discounts offered through customer acquisition and retention programs, and lifetime subscription plans that have reached full revenue recognition.
|
•
|
2014 vs. 2013
: For the
years ended
December 31, 2014
and
2013
, SAC, per installation, was
$34
and
$43
, respectively. The decrease was primarily due to improvements in contractual OEM rates.
|
•
|
2013 vs. 2012
: For the
years ended
December 31, 2013
and
2012
, SAC, per installation, was
$43
and
$47
, respectively. The decrease was primarily due to lower subsidies per vehicle.
|
•
|
2014 vs. 2013
: For the
years ended
December 31, 2014
and
2013
, customer service and billing expenses, per average subscriber, were
$1.07
and
$1.06
, respectively. The increase was primarily driven by increased bad debt expense.
|
•
|
2013 vs. 2012
: For the
years ended
December 31, 2013
and
2012
, customer service and billing expenses, per average subscriber, were
$1.06
and
$1.07
, respectively. The decrease was primarily driven by higher subscriber growth compared to spend for agent staffing and training.
|
•
|
2014 vs. 2013
: For the
years ended
December 31, 2014
and
2013
, free cash flow was
$1,155,776
and
$927,496
, respectively, an increase of
$228,280
. The increase was primarily driven by higher net cash provided by operating activities from improved performance, collections from subscribers and distributors, the absence of satellite construction related payments and dividends received from Sirius XM Canada, partially offset by payments related to improvements to our terrestrial repeater network.
|
•
|
2013 vs. 2012
: For the
years ended
December 31, 2013
and
2012
, free cash flow was
$927,496
and
$709,446
, respectively, an increase of
$218,050
. The increase was primarily driven by higher net cash provided by operating activities from improved operating performance, lower interest payments, and higher collections from subscribers and distributors, partially offset by payments related to the launch of our FM-6 satellite and the purchase of certain long-lead parts for a future satellite.
|
•
|
2014 vs. 2013
: For the
years ended
December 31, 2014
and
2013
, adjusted EBITDA was
$1,467,775
and
$1,166,140
, respectively, an increase of
26%
, or
$301,635
. The increase was due to growth in adjusted revenues primarily as a result of the increase in our subscriber base and certain of our subscription rates, improved revenue share and OEM subsidy rates per vehicle, and the renewal of certain programming agreements at more cost effective terms; partially offset by higher legal expenses and costs associated with the growth in our revenues and subscriber base.
|
•
|
2013 vs. 2012
: For the
years ended
December 31, 2013
and
2012
, adjusted EBITDA was
$1,166,140
and
$920,343
, respectively, an increase of
27%
, or
$245,797
. The increase was primarily due to increases in adjusted revenues, partially offset by increases in expenses included in adjusted EBITDA. The increase in adjusted revenues was primarily due to the increase in our subscriber base and certain of our subscription rates. The increase in expenses was primarily driven by higher revenue share and royalties expenses associated with growth in revenues, sales and marketing costs related to subscriber communications and retention marketing, customer service and billing costs related to increased agent training and staffing as well as subscriber volume and subscriber acquisition costs.
|
|
For the Years Ended December 31,
|
|
|
|
|
||||||||||||||
(in thousands)
|
2014
|
|
2013
|
|
2012
|
|
2014 vs. 2013
|
|
2013 vs. 2012
|
||||||||||
Net cash provided by operating activities
|
$
|
1,253,244
|
|
|
$
|
1,102,832
|
|
|
$
|
806,765
|
|
|
$
|
150,412
|
|
|
$
|
296,067
|
|
Net cash used in investing activities
|
(96,324
|
)
|
|
(700,688
|
)
|
|
(97,319
|
)
|
|
604,364
|
|
|
(603,369
|
)
|
|||||
Net cash used in financing activities
|
(1,144,001
|
)
|
|
(788,284
|
)
|
|
(962,491
|
)
|
|
(355,717
|
)
|
|
174,207
|
|
|||||
Net increase (decrease) in cash and cash equivalents
|
12,919
|
|
|
(386,140
|
)
|
|
(253,045
|
)
|
|
399,059
|
|
|
(133,095
|
)
|
|||||
Cash and cash equivalents at beginning of period
|
134,805
|
|
|
520,945
|
|
|
773,990
|
|
|
(386,140
|
)
|
|
(253,045
|
)
|
|||||
Cash and cash equivalents at end of period
|
$
|
147,724
|
|
|
$
|
134,805
|
|
|
$
|
520,945
|
|
|
$
|
12,919
|
|
|
$
|
(386,140
|
)
|
|
Unaudited
|
||||||||||
|
For the Years Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
Net income (GAAP):
|
$
|
493,241
|
|
|
$
|
377,215
|
|
|
$
|
3,472,702
|
|
Add back items excluded from Adjusted EBITDA:
|
|
|
|
|
|
||||||
Purchase price accounting adjustments:
|
|
|
|
|
|
||||||
Revenues (see pages 40-42)
|
7,251
|
|
|
7,251
|
|
|
7,479
|
|
|||
Operating expenses (see pages 40-42)
|
(3,781
|
)
|
|
(207,854
|
)
|
|
(289,278
|
)
|
|||
Share-based payment expense (GAAP)
|
78,212
|
|
|
68,876
|
|
|
63,822
|
|
|||
Depreciation and amortization (GAAP)
|
266,423
|
|
|
253,314
|
|
|
266,295
|
|
|||
Interest expense, net of amounts capitalized (GAAP)
|
269,010
|
|
|
204,671
|
|
|
265,321
|
|
|||
Loss on extinguishment of debt and credit facilities, net (GAAP)
|
—
|
|
|
190,577
|
|
|
132,726
|
|
|||
Interest and investment income (GAAP)
|
(15,498
|
)
|
|
(6,976
|
)
|
|
(716
|
)
|
|||
Loss on change in value of derivatives (GAAP)
|
34,485
|
|
|
20,393
|
|
|
—
|
|
|||
Other loss (income) (GAAP)
|
887
|
|
|
(1,204
|
)
|
|
226
|
|
|||
Income tax expense (benefit) (GAAP)
|
337,545
|
|
|
259,877
|
|
|
(2,998,234
|
)
|
|||
Adjusted EBITDA
|
$
|
1,467,775
|
|
|
$
|
1,166,140
|
|
|
$
|
920,343
|
|
|
Unaudited
|
||||||||||
|
For the Years Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
Subscriber revenue, excluding connected vehicle (GAAP)
|
$
|
3,466,050
|
|
|
$
|
3,272,718
|
|
|
$
|
2,962,665
|
|
Add: advertising revenue (GAAP)
|
100,982
|
|
|
89,288
|
|
|
82,320
|
|
|||
Add: other subscription-related revenue (GAAP)
|
336,408
|
|
|
290,895
|
|
|
237,868
|
|
|||
Add: purchase price accounting adjustments
|
—
|
|
|
—
|
|
|
228
|
|
|||
|
$
|
3,903,440
|
|
|
$
|
3,652,901
|
|
|
$
|
3,283,081
|
|
Daily weighted average number of subscribers
|
26,283,785
|
|
|
24,886,300
|
|
|
22,794,170
|
|
|||
ARPU
|
$
|
12.38
|
|
|
$
|
12.23
|
|
|
$
|
12.00
|
|
|
Unaudited
|
||||||||||
|
For the Years Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
Customer service and billing expenses, excluding connected vehicle (GAAP)
|
$
|
340,094
|
|
|
$
|
317,832
|
|
|
$
|
294,980
|
|
Less: share-based payment expense (GAAP)
|
(2,780
|
)
|
|
(2,219
|
)
|
|
(1,847
|
)
|
|||
|
$
|
337,314
|
|
|
$
|
315,613
|
|
|
$
|
293,133
|
|
Daily weighted average number of subscribers
|
26,283,785
|
|
|
24,886,300
|
|
|
22,794,170
|
|
|||
Customer service and billing expenses, per average subscriber
|
$
|
1.07
|
|
|
$
|
1.06
|
|
|
$
|
1.07
|
|
|
Unaudited
|
||||||||||
|
For the Years Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
Cash Flow information
|
|
|
|
|
|
||||||
Net cash provided by operating activities
|
$
|
1,253,244
|
|
|
$
|
1,102,832
|
|
|
$
|
806,765
|
|
Net cash used in investing activities
|
$
|
(96,324
|
)
|
|
$
|
(700,688
|
)
|
|
$
|
(97,319
|
)
|
Net cash used in financing activities
|
$
|
(1,144,001
|
)
|
|
$
|
(788,284
|
)
|
|
$
|
(962,491
|
)
|
Free Cash Flow
|
|
|
|
|
|
||||||
Net cash provided by operating activities
|
$
|
1,253,244
|
|
|
$
|
1,102,832
|
|
|
$
|
806,765
|
|
Additions to property and equipment
|
(121,646
|
)
|
|
(173,617
|
)
|
|
(97,293
|
)
|
|||
Purchases of restricted and other investments
|
—
|
|
|
(1,719
|
)
|
|
(26
|
)
|
|||
Return of capital from investment in unconsolidated entity
|
24,178
|
|
|
—
|
|
|
—
|
|
|||
Free cash flow
|
$
|
1,155,776
|
|
|
$
|
927,496
|
|
|
$
|
709,446
|
|
|
Unaudited
|
||||||||||
|
For the Years Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
Subscriber acquisition costs (GAAP)
|
$
|
493,464
|
|
|
$
|
495,610
|
|
|
$
|
474,697
|
|
Less: margin from direct sales of radios and accessories (GAAP)
|
(60,264
|
)
|
|
(54,095
|
)
|
|
(41,690
|
)
|
|||
Add: purchase price accounting adjustments
|
—
|
|
|
64,365
|
|
|
90,503
|
|
|||
|
$
|
433,200
|
|
|
$
|
505,880
|
|
|
$
|
523,510
|
|
Installations
|
12,787,537
|
|
|
11,765,078
|
|
|
11,061,304
|
|
|||
SAC, per installation
|
$
|
34
|
|
|
$
|
43
|
|
|
$
|
47
|
|
|
|
SIRIUS XM HOLDINGS INC.
|
|
|
|
By:
|
/s/ D
AVID
J. F
REAR
|
|
David J. Frear
|
|
Executive Vice President and
|
|
Chief Financial Officer
|
|
(Principal Financial Officer)
|
Signature
|
|
Title
|
Date
|
|
|
|
|
/s/ G
REGORY
B. M
AFFEI
|
|
Chairman of the Board of Directors and Director
|
February 5, 2015
|
(Gregory B. Maffei)
|
|
||
/s/ J
AMES
E.
M
EYER
|
|
Chief Executive Officer and Director (Principal Executive Officer)
|
February 5, 2015
|
(
James E. Meyer)
|
|
||
/s/ D
AVID
J. F
REAR
|
|
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
|
February 5, 2015
|
(
David J. Frear)
|
|
||
/s/ T
HOMAS
D. B
ARRY
|
|
Senior Vice President and Controller
(Principal Accounting Officer)
|
February 5, 2015
|
(Thomas D. Barry)
|
|
||
/s/ J
OAN
L. A
MBLE
|
|
Director
|
February 5, 2015
|
(Joan L. Amble)
|
|
||
/s/ A
NTHONY
J. B
ATES
|
|
Director
|
February 5, 2015
|
(Anthony J. Bates
)
|
|
||
/s/ G
EORGE
W. B
ODENHEIMER
|
|
Director
|
February 5, 2015
|
(George W. Bodenheimer)
|
|
||
/s/ M
ARK
D. C
ARLETON
|
|
Director
|
February 5, 2015
|
(Mark D. Carleton
)
|
|
||
/s/ E
DDY
W. H
ARTENSTEIN
|
|
Director
|
February 5, 2015
|
(Eddy W. Hartenstein)
|
|
||
/s/ J
AMES
P. H
OLDEN
|
|
Director
|
February 5, 2015
|
(James P. Holden)
|
|
||
/s/ E
VAN
D. M
ALONE
|
|
Director
|
February 5, 2015
|
(Evan D
. Malone)
|
|
||
/s/ J
AMES
F. M
OONEY
|
|
Director
|
February 5, 2015
|
(James F. Mooney)
|
|
||
/s/ C
ARL
E. V
OGEL
|
|
Director
|
February 5, 2015
|
(Carl E. Vogel)
|
|
||
/s/ V
ANESSA
A. W
ITTMAN
|
|
Director
|
February 5, 2015
|
(Vanessa A. Wittman)
|
|
||
/s/ D
AVID
M. Z
ASLAV
|
|
Director
|
February 5, 2015
|
(David M. Zaslav)
|
|
|
/s/ KPMG LLP
|
|
/s/ KPMG LLP
|
|
For the Years Ended December 31,
|
||||||||||
(in thousands, except per share data)
|
2014
|
|
2013
|
|
2012
|
||||||
Revenue:
|
|
|
|
|
|
||||||
Subscriber revenue
|
$
|
3,554,302
|
|
|
$
|
3,284,660
|
|
|
$
|
2,962,665
|
|
Advertising revenue
|
100,982
|
|
|
89,288
|
|
|
82,320
|
|
|||
Equipment revenue
|
104,661
|
|
|
80,573
|
|
|
73,456
|
|
|||
Other revenue
|
421,150
|
|
|
344,574
|
|
|
283,599
|
|
|||
Total revenue
|
4,181,095
|
|
|
3,799,095
|
|
|
3,402,040
|
|
|||
Operating expenses:
|
|
|
|
|
|
||||||
Cost of services:
|
|
|
|
|
|
||||||
Revenue share and royalties
|
810,028
|
|
|
677,642
|
|
|
551,012
|
|
|||
Programming and content
|
297,313
|
|
|
290,323
|
|
|
278,997
|
|
|||
Customer service and billing
|
370,585
|
|
|
320,755
|
|
|
294,980
|
|
|||
Satellite and transmission
|
86,013
|
|
|
79,292
|
|
|
72,615
|
|
|||
Cost of equipment
|
44,397
|
|
|
26,478
|
|
|
31,766
|
|
|||
Subscriber acquisition costs
|
493,464
|
|
|
495,610
|
|
|
474,697
|
|
|||
Sales and marketing
|
336,480
|
|
|
291,024
|
|
|
248,905
|
|
|||
Engineering, design and development
|
62,784
|
|
|
57,969
|
|
|
48,843
|
|
|||
General and administrative
|
293,938
|
|
|
262,135
|
|
|
261,905
|
|
|||
Depreciation and amortization
|
266,423
|
|
|
253,314
|
|
|
266,295
|
|
|||
Total operating expenses
|
3,061,425
|
|
|
2,754,542
|
|
|
2,530,015
|
|
|||
Income from operations
|
1,119,670
|
|
|
1,044,553
|
|
|
872,025
|
|
|||
Other income (expense):
|
|
|
|
|
|
||||||
Interest expense, net of amounts capitalized
|
(269,010
|
)
|
|
(204,671
|
)
|
|
(265,321
|
)
|
|||
Loss on extinguishment of debt and credit facilities, net
|
—
|
|
|
(190,577
|
)
|
|
(132,726
|
)
|
|||
Interest and investment income
|
15,498
|
|
|
6,976
|
|
|
716
|
|
|||
Loss on change in value of derivatives
|
(34,485
|
)
|
|
(20,393
|
)
|
|
—
|
|
|||
Other (loss) income
|
(887
|
)
|
|
1,204
|
|
|
(226
|
)
|
|||
Total other expense
|
(288,884
|
)
|
|
(407,461
|
)
|
|
(397,557
|
)
|
|||
Income before income taxes
|
830,786
|
|
|
637,092
|
|
|
474,468
|
|
|||
Income tax (expense) benefit
|
(337,545
|
)
|
|
(259,877
|
)
|
|
2,998,234
|
|
|||
Net income
|
$
|
493,241
|
|
|
$
|
377,215
|
|
|
$
|
3,472,702
|
|
Foreign currency translation adjustment, net of tax
|
(94
|
)
|
|
(428
|
)
|
|
49
|
|
|||
Total comprehensive income
|
$
|
493,147
|
|
|
$
|
376,787
|
|
|
$
|
3,472,751
|
|
Net income per common share:
|
|
|
|
|
|
||||||
Basic
|
$
|
0.09
|
|
|
$
|
0.06
|
|
|
$
|
0.55
|
|
Diluted
|
$
|
0.08
|
|
|
$
|
0.06
|
|
|
$
|
0.51
|
|
Weighted average common shares outstanding:
|
|
|
|
|
|
||||||
Basic
|
5,788,944
|
|
|
6,227,646
|
|
|
4,209,073
|
|
|||
Diluted
|
5,862,020
|
|
|
6,384,791
|
|
|
6,873,786
|
|
|
As of December 31,
|
||||||
(in thousands, except share and per share data)
|
2014
|
|
2013
|
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
147,724
|
|
|
$
|
134,805
|
|
Receivables, net
|
220,579
|
|
|
192,912
|
|
||
Inventory, net
|
19,397
|
|
|
13,863
|
|
||
Prepaid expenses
|
116,336
|
|
|
110,530
|
|
||
Related party current assets
|
4,344
|
|
|
9,145
|
|
||
Deferred tax asset
|
1,038,603
|
|
|
937,598
|
|
||
Other current assets
|
2,763
|
|
|
20,160
|
|
||
Total current assets
|
1,549,746
|
|
|
1,419,013
|
|
||
Property and equipment, net
|
1,510,112
|
|
|
1,594,574
|
|
||
Long-term restricted investments
|
5,922
|
|
|
5,718
|
|
||
Deferred financing fees, net
|
12,021
|
|
|
12,604
|
|
||
Intangible assets, net
|
2,645,046
|
|
|
2,700,062
|
|
||
Goodwill
|
2,205,107
|
|
|
2,204,553
|
|
||
Related party long-term assets
|
3,000
|
|
|
30,164
|
|
||
Long-term deferred tax asset
|
437,736
|
|
|
868,057
|
|
||
Other long-term assets
|
6,819
|
|
|
10,035
|
|
||
Total assets
|
$
|
8,375,509
|
|
|
$
|
8,844,780
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable and accrued expenses
|
$
|
587,755
|
|
|
$
|
578,333
|
|
Accrued interest
|
80,440
|
|
|
42,085
|
|
||
Current portion of deferred revenue
|
1,632,381
|
|
|
1,586,611
|
|
||
Current portion of deferred credit on executory contracts
|
1,394
|
|
|
3,781
|
|
||
Current maturities of long-term debt
|
7,482
|
|
|
496,815
|
|
||
Current maturities of long-term related party debt
|
—
|
|
|
10,959
|
|
||
Related party current liabilities
|
4,340
|
|
|
20,320
|
|
||
Total current liabilities
|
2,313,792
|
|
|
2,738,904
|
|
||
Deferred revenue
|
151,901
|
|
|
149,026
|
|
||
Deferred credit on executory contracts
|
—
|
|
|
1,394
|
|
||
Long-term debt
|
4,493,863
|
|
|
3,093,821
|
|
||
Related party long-term liabilities
|
13,635
|
|
|
16,337
|
|
||
Other long-term liabilities
|
92,481
|
|
|
99,556
|
|
||
Total liabilities
|
7,065,672
|
|
|
6,099,038
|
|
||
Commitments and contingencies (Note 17)
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
||||
Preferred stock, undesignated, par value $0.001 (liquidation preference of $0.001 per share); 50,000,000 shares authorized and 0 shares issued and outstanding at December 31, 2014 and December 31, 2013
|
—
|
|
|
—
|
|
||
Common stock, par value $0.001; 9,000,000,000 shares authorized; 5,653,529,403 and 6,096,220,526 shares issued; 5,646,119,122 and 6,096,220,526 outstanding at December 31, 2014 and December 31, 2013, respectively
|
5,653
|
|
|
6,096
|
|
||
Accumulated other comprehensive loss, net of tax
|
(402
|
)
|
|
(308
|
)
|
||
Additional paid-in capital
|
6,771,554
|
|
|
8,674,129
|
|
||
Treasury stock, at cost; 7,410,281 and 0 shares of common stock at December 31, 2014 and December 31, 2013, respectively
|
(26,034
|
)
|
|
—
|
|
||
Accumulated deficit
|
(5,440,934
|
)
|
|
(5,934,175
|
)
|
||
Total stockholders’ equity
|
1,309,837
|
|
|
2,745,742
|
|
||
Total liabilities and stockholders’ equity
|
$
|
8,375,509
|
|
|
$
|
8,844,780
|
|
|
Convertible Perpetual
Preferred Stock, Series B-1 |
|
Common Stock
|
|
|
|
|
|
Treasury Stock
|
|
|
|
|
||||||||||||||||||||||||
(in thousands, except share data)
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
Additional
Paid-in
Capital
|
|
Shares
|
|
Amount
|
|
Accumulated
Deficit
|
|
Total
Stockholders’
Equity
|
||||||||||||||||||
Balance at January 1, 2012
|
12,500,000
|
|
|
$
|
13
|
|
|
3,753,201,929
|
|
|
$
|
3,753
|
|
|
$
|
71
|
|
|
$
|
10,484,400
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
(9,784,092
|
)
|
|
$
|
704,145
|
|
|
Comprehensive income, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
49
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,472,702
|
|
|
3,472,751
|
|
||||||||
Issuance of common stock to employees and employee benefit plans, net of forfeitures
|
—
|
|
|
—
|
|
|
1,571,175
|
|
—
|
|
2
|
|
|
—
|
|
|
3,521
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,523
|
|
|||||||
Share-based payment expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
60,299
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
60,299
|
|
||||||||
Exercise of options
|
—
|
|
|
—
|
|
|
214,199,297
|
|
|
214
|
|
|
—
|
|
|
125,695
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
125,909
|
|
||||||||
Cash dividends paid on common shares ($0.05)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(262,387
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(262,387
|
)
|
||||||||
Cash dividends paid on preferred shares on as-converted basis
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(64,675
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(64,675
|
)
|
||||||||
Conversion of preferred stock to common stock
|
(6,249,900
|
)
|
|
(7
|
)
|
|
1,293,467,684
|
|
|
1,294
|
|
|
—
|
|
|
(1,287
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Balance at December 31, 2012
|
6,250,100
|
|
|
$
|
6
|
|
|
5,262,440,085
|
|
|
$
|
5,263
|
|
|
$
|
120
|
|
|
$
|
10,345,566
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
(6,311,390
|
)
|
|
$
|
4,039,565
|
|
|
Comprehensive income, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(428
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
377,215
|
|
|
376,787
|
|
||||||||
Share-based payment expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
68,876
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
68,876
|
|
||||||||
Exercise of options and vesting of restricted stock units
|
—
|
|
|
—
|
|
|
32,841,381
|
|
|
32
|
|
|
—
|
|
|
19,396
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
19,428
|
|
||||||||
Minimum withholding taxes on net share settlement of stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(46,342
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(46,342
|
)
|
||||||||
Conversion of preferred stock to common stock
|
(6,250,100
|
)
|
|
(6
|
)
|
|
1,293,509,076
|
|
|
1,293
|
|
|
—
|
|
|
(1,287
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Conversion of Exchangeable Notes to common stock
|
—
|
|
|
—
|
|
|
27,687,850
|
|
|
28
|
|
|
—
|
|
|
45,069
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
45,097
|
|
||||||||
Common stock repurchased
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
520,257,866
|
|
|
(1,764,969
|
)
|
|
—
|
|
|
(1,764,969
|
)
|
||||||||
Common stock retired
|
—
|
|
|
—
|
|
|
(520,257,866
|
)
|
|
(520
|
)
|
|
—
|
|
|
(1,764,449
|
)
|
|
(520,257,866
|
)
|
|
1,764,969
|
|
|
—
|
|
|
—
|
|
||||||||
Initial fair value of forward contract
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,300
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,300
|
|
||||||||
Balance at December 31, 2013
|
—
|
|
|
$
|
—
|
|
|
6,096,220,526
|
|
|
$
|
6,096
|
|
|
$
|
(308
|
)
|
|
$
|
8,674,129
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
(5,934,175
|
)
|
|
$
|
2,745,742
|
|
|
Comprehensive income, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(94
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
493,241
|
|
|
493,147
|
|
||||||||
Share-based payment expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
78,212
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
78,212
|
|
||||||||
Exercise of options and vesting of restricted stock units
|
—
|
|
|
—
|
|
|
15,960,020
|
|
|
16
|
|
|
—
|
|
|
315
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
331
|
|
||||||||
Minimum withholding taxes on net share settlement of stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(37,320
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(37,320
|
)
|
||||||||
Conversion of Exchangeable Notes to common stock
|
—
|
|
|
—
|
|
|
272,855,859
|
|
|
273
|
|
|
—
|
|
|
502,097
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
502,370
|
|
||||||||
Issuance of common stock upon exercise of warrants
|
—
|
|
|
—
|
|
|
99,349
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Common stock repurchased
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
739,016,632
|
|
|
(2,472,645
|
)
|
|
—
|
|
|
(2,472,645
|
)
|
||||||||
Common stock retired
|
—
|
|
|
—
|
|
|
(731,606,351
|
)
|
|
(732
|
)
|
|
—
|
|
|
(2,445,879
|
)
|
|
(731,606,351
|
)
|
|
2,446,611
|
|
|
—
|
|
|
—
|
|
||||||||
Balance at December 31, 2014
|
—
|
|
|
$
|
—
|
|
|
5,653,529,403
|
|
|
$
|
5,653
|
|
|
$
|
(402
|
)
|
|
$
|
6,771,554
|
|
|
7,410,281
|
|
|
$
|
(26,034
|
)
|
|
$
|
(5,440,934
|
)
|
|
$
|
1,309,837
|
|
|
For the Years Ended December 31,
|
||||||||||
(in thousands)
|
2014
|
|
2013
|
|
2012
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net income
|
$
|
493,241
|
|
|
$
|
377,215
|
|
|
$
|
3,472,702
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
266,423
|
|
|
253,314
|
|
|
266,295
|
|
|||
Non-cash interest expense, net of amortization of premium
|
21,039
|
|
|
21,698
|
|
|
35,924
|
|
|||
Provision for doubtful accounts
|
44,961
|
|
|
39,016
|
|
|
34,548
|
|
|||
Amortization of deferred income related to equity method investment
|
(2,776
|
)
|
|
(2,776
|
)
|
|
(2,776
|
)
|
|||
Loss on extinguishment of debt and credit facilities, net
|
—
|
|
|
190,577
|
|
|
132,726
|
|
|||
(Gain) loss on unconsolidated entity investments, net
|
(5,547
|
)
|
|
(5,865
|
)
|
|
420
|
|
|||
Dividend received from unconsolidated entity investment
|
17,019
|
|
|
22,065
|
|
|
1,185
|
|
|||
Loss on disposal of assets
|
220
|
|
|
351
|
|
|
657
|
|
|||
Loss on change in value of derivatives
|
34,485
|
|
|
20,393
|
|
|
—
|
|
|||
Share-based payment expense
|
78,212
|
|
|
68,876
|
|
|
63,822
|
|
|||
Deferred income taxes
|
327,461
|
|
|
259,787
|
|
|
(3,001,818
|
)
|
|||
Other non-cash purchase price adjustments
|
(3,781
|
)
|
|
(207,854
|
)
|
|
(289,050
|
)
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|||||
Receivables
|
(72,628
|
)
|
|
(15,245
|
)
|
|
(58,593
|
)
|
|||
Inventory
|
(5,534
|
)
|
|
11,474
|
|
|
11,374
|
|
|||
Related party assets
|
(4,097
|
)
|
|
2,031
|
|
|
9,523
|
|
|||
Prepaid expenses and other current assets
|
(1,195
|
)
|
|
16,788
|
|
|
647
|
|
|||
Other long-term assets
|
3,173
|
|
|
2,973
|
|
|
22,779
|
|
|||
Accounts payable and accrued expenses
|
(17,191
|
)
|
|
(44,009
|
)
|
|
46,043
|
|
|||
Accrued interest
|
38,355
|
|
|
8,131
|
|
|
(36,451
|
)
|
|||
Deferred revenue
|
48,645
|
|
|
73,593
|
|
|
101,311
|
|
|||
Related party liabilities
|
(206
|
)
|
|
(1,991
|
)
|
|
(7,545
|
)
|
|||
Other long-term liabilities
|
(7,035
|
)
|
|
12,290
|
|
|
3,042
|
|
|||
Net cash provided by operating activities
|
1,253,244
|
|
|
1,102,832
|
|
|
806,765
|
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Additions to property and equipment
|
(121,646
|
)
|
|
(173,617
|
)
|
|
(97,293
|
)
|
|||
Purchases of restricted and other investments
|
—
|
|
|
(1,719
|
)
|
|
(26
|
)
|
|||
Acquisition of business, net of cash acquired
|
1,144
|
|
|
(525,352
|
)
|
|
—
|
|
|||
Return of capital from investment in unconsolidated entity
|
24,178
|
|
|
—
|
|
|
—
|
|
|||
Net cash used in investing activities
|
(96,324
|
)
|
|
(700,688
|
)
|
|
(97,319
|
)
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
||||||
Proceeds from exercise of stock options
|
331
|
|
|
21,968
|
|
|
123,369
|
|
|||
Taxes paid in lieu of shares issued for stock-based compensation
|
(37,318
|
)
|
|
(46,342
|
)
|
|
—
|
|
|||
Proceeds from long-term borrowings and revolving credit facility, net of costs
|
2,406,205
|
|
|
3,156,063
|
|
|
383,641
|
|
|||
Payment of premiums on redemption of debt
|
—
|
|
|
(175,453
|
)
|
|
(100,615
|
)
|
|||
Repayment of long-term borrowings and revolving credit facility
|
(1,016,420
|
)
|
|
(1,782,160
|
)
|
|
(915,824
|
)
|
|||
Repayment of related party long-term borrowings
|
—
|
|
|
(200,000
|
)
|
|
(126,000
|
)
|
|||
Common stock repurchased and retired
|
(2,496,799
|
)
|
|
(1,762,360
|
)
|
|
—
|
|
|||
Dividends paid
|
—
|
|
|
—
|
|
|
(327,062
|
)
|
|||
Net cash used in financing activities
|
(1,144,001
|
)
|
|
(788,284
|
)
|
|
(962,491
|
)
|
|||
Net increase (decrease) in cash and cash equivalents
|
12,919
|
|
|
(386,140
|
)
|
|
(253,045
|
)
|
|||
Cash and cash equivalents at beginning of period
|
134,805
|
|
|
520,945
|
|
|
773,990
|
|
|||
Cash and cash equivalents at end of period
|
$
|
147,724
|
|
|
$
|
134,805
|
|
|
$
|
520,945
|
|
|
For the Years Ended December 31,
|
||||||||||
(in thousands)
|
2014
|
|
2013
|
|
2012
|
||||||
Supplemental Disclosure of Cash and Non-Cash Flow Information
|
|
|
|
|
|
||||||
Cash paid during the period for:
|
|
|
|
|
|
||||||
Interest, net of amounts capitalized
|
$
|
199,424
|
|
|
$
|
169,781
|
|
|
$
|
262,039
|
|
Income taxes paid
|
$
|
8,713
|
|
|
$
|
2,783
|
|
|
$
|
4,935
|
|
Acquisition related costs
|
$
|
—
|
|
|
$
|
2,902
|
|
|
$
|
—
|
|
Non-cash investing and financing activities:
|
|
|
|
|
|
||||||
Capital lease obligations incurred to acquire assets
|
$
|
719
|
|
|
$
|
11,966
|
|
|
$
|
12,781
|
|
Conversion of Series B preferred stock to common stock
|
$
|
—
|
|
|
$
|
1,293
|
|
|
$
|
1,294
|
|
Treasury stock not yet settled
|
$
|
26,034
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Conversion of 7% Exchangeable Notes to common stock, net of debt issuance and deferred financing costs
|
$
|
502,097
|
|
|
$
|
45,097
|
|
|
$
|
—
|
|
Performance incentive payments
|
$
|
—
|
|
|
$
|
16,900
|
|
|
$
|
—
|
|
Goodwill reduced for the exercise and vesting of certain stock awards
|
$
|
—
|
|
|
$
|
274
|
|
|
$
|
19,491
|
|
Purchase price accounting adjustments to goodwill
|
$
|
1,698
|
|
|
$
|
—
|
|
|
$
|
—
|
|
(1)
|
Business & Basis of Presentation
|
(2)
|
Acquisitions
|
(3)
|
Summary of Significant Accounting Policies
|
(4)
|
Fair Value Measurements
|
i.
|
Level 1 input: unadjusted quoted prices in active markets for identical instrument;
|
ii.
|
Level 2 input: observable market data for the same or similar instrument but not Level 1, including quoted prices for identical or similar assets or liabilities in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and
|
iii.
|
Level 3 input: unobservable inputs developed using management's assumptions about the inputs used for pricing the asset or liability.
|
|
December 31, 2014
|
|
December 31, 2013
|
||||||||||||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total Fair Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total Fair Value
|
||||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Sirius XM Canada Holdings Inc. ("Sirius XM Canada") - investment (a)
|
$
|
246,500
|
|
|
—
|
|
|
—
|
|
|
$
|
246,500
|
|
|
$
|
432,200
|
|
|
—
|
|
|
—
|
|
|
$
|
432,200
|
|
Sirius XM Canada - fair value of host contract of debenture (b)
|
$
|
—
|
|
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
3,641
|
|
|
$
|
3,641
|
|
Sirius XM Canada - fair value of embedded derivative of debenture (b)
|
$
|
—
|
|
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
57
|
|
|
$
|
57
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Debt (c)
|
$
|
—
|
|
|
4,613,044
|
|
|
—
|
|
|
$
|
4,613,044
|
|
|
$
|
—
|
|
|
4,066,755
|
|
|
—
|
|
|
$
|
4,066,755
|
|
Share Repurchase Agreement (d)
|
$
|
—
|
|
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
15,702
|
|
|
—
|
|
|
$
|
15,702
|
|
(a)
|
This amount approximates fair value. The carrying value of our investment in Sirius XM Canada was
$2,654
and
$26,972
as of
December 31, 2014
and
2013
, respectively.
|
(b)
|
As of
December 31, 2013
, we held an investment in CAD
$4,000
face value of
8%
convertible unsecured subordinated debentures issued by Sirius XM Canada for which the embedded conversion feature was bifurcated from the host contract. Sirius XM Canada redeemed and converted the debentures during the
year ended
December 31, 2014
.
|
(c)
|
The fair value for non-publicly traded instruments is based upon estimates from a market maker and brokerage firm. Refer to Note 14 for information related to the carrying value of our debt as of
December 31, 2014
and
December 31, 2013
.
|
(d)
|
The final installment under the share repurchase agreement with Liberty Media was settled on April 25, 2014. The fair value of the derivative associated with the share repurchase agreement was determined using observable inputs, including the U.S. spot LIBOR curve and other available market data and was recorded in our consolidated balance sheets in Related party current liabilities, with changes in fair value recorded to our statements of comprehensive income.
|
(5)
|
Earnings per Share
|
|
For the Years Ended December 31,
|
||||||||||
(in thousands, except per share data)
|
2014
|
|
2013
|
|
2012
|
||||||
Numerator:
|
|
|
|
|
|
||||||
Net income
|
$
|
493,241
|
|
|
$
|
377,215
|
|
|
$
|
3,472,702
|
|
Less:
|
|
|
|
|
|
||||||
Allocation of undistributed income to Series B Preferred Stock
|
—
|
|
|
(3,825
|
)
|
|
(1,084,895
|
)
|
|||
Dividends paid to preferred stockholders
|
—
|
|
|
—
|
|
|
(64,675
|
)
|
|||
Net income available to common stockholders for basic net income per common share
|
$
|
493,241
|
|
|
$
|
373,390
|
|
|
$
|
2,323,132
|
|
Add back:
|
|
|
|
|
|
||||||
Allocation of undistributed income to Series B Preferred Stock
|
—
|
|
|
3,825
|
|
|
1,084,895
|
|
|||
Dividends paid to preferred stockholders
|
—
|
|
|
—
|
|
|
64,675
|
|
|||
Effect of interest on assumed conversions of convertible debt
|
—
|
|
|
—
|
|
|
38,500
|
|
|||
Net income available to common stockholders for diluted net income per common share
|
$
|
493,241
|
|
|
$
|
377,215
|
|
|
$
|
3,511,202
|
|
Denominator:
|
|
|
|
|
|
||||||
Weighted average common shares outstanding for basic net income per common share (a)
|
5,788,944
|
|
|
6,227,646
|
|
|
4,209,073
|
|
|||
Weighted average impact of assumed Series B Preferred Stock conversion
|
—
|
|
|
63,789
|
|
|
2,215,900
|
|
|||
Weighted average impact of assumed convertible debt (b)
|
—
|
|
|
—
|
|
|
298,725
|
|
|||
Weighted average impact of other dilutive equity instruments
|
73,076
|
|
|
93,356
|
|
|
150,088
|
|
|||
Weighted average shares for diluted net income per common share
|
5,862,020
|
|
|
6,384,791
|
|
|
6,873,786
|
|
|||
Net income per common share:
|
|
|
|
|
|
||||||
Basic
|
$
|
0.09
|
|
|
$
|
0.06
|
|
|
$
|
0.55
|
|
Diluted
|
$
|
0.08
|
|
|
$
|
0.06
|
|
|
$
|
0.51
|
|
(a)
|
For the
year ended
December 31, 2014
, the weighted-average common shares outstanding for basic net income per common share includes approximately
31,078,000
shares of the
272,855,859
shares related to the conversion of the
7%
Exchangeable Senior Subordinated Notes due 2014, due to the weighted-average in calculating earnings per share.
|
(b)
|
During the
years ended
December 31, 2013
and
2012
, the common stock reserved for conversion in connection with the 7% Exchangeable Senior Subordinated Notes due 2014 were considered to be anti-dilutive and dilutive, respectively, in our calculation of diluted net income per share.
|
(6)
|
Receivables, net
|
|
December 31,
2014 |
|
December 31,
2013 |
||||
Gross customer accounts receivable
|
$
|
101,634
|
|
|
$
|
95,562
|
|
Allowance for doubtful accounts
|
(7,815
|
)
|
|
(9,078
|
)
|
||
Customer accounts receivable, net
|
$
|
93,819
|
|
|
$
|
86,484
|
|
|
|
|
|
||||
Receivables from distributors
|
105,731
|
|
|
88,975
|
|
||
|
|
|
|
||||
Other receivables
|
21,029
|
|
|
17,453
|
|
||
|
|
|
|
||||
Total Receivables, net
|
$
|
220,579
|
|
|
$
|
192,912
|
|
(7)
|
Inventory, net
|
|
December 31,
2014 |
|
December 31,
2013 |
||||
Raw materials
|
$
|
12,150
|
|
|
$
|
12,358
|
|
Finished goods
|
17,971
|
|
|
15,723
|
|
||
Allowance for obsolescence
|
(10,724
|
)
|
|
(14,218
|
)
|
||
Total inventory, net
|
$
|
19,397
|
|
|
$
|
13,863
|
|
(8)
|
Goodwill
|
(9)
|
Intangible Assets
|
|
|
|
December 31, 2014
|
|
December 31, 2013
|
||||||||||||||||||||
|
Weighted Average
Useful Lives
|
|
Gross
Carrying
Value
|
|
Accumulated
Amortization
|
|
Net Carrying
Value
|
|
Gross
Carrying
Value
|
|
Accumulated
Amortization
|
|
Net Carrying
Value
|
||||||||||||
Due to the Merger:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Indefinite life intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
FCC licenses
|
Indefinite
|
|
$
|
2,083,654
|
|
|
$
|
—
|
|
|
$
|
2,083,654
|
|
|
$
|
2,083,654
|
|
|
$
|
—
|
|
|
$
|
2,083,654
|
|
Trademark
|
Indefinite
|
|
250,000
|
|
|
—
|
|
|
250,000
|
|
|
250,000
|
|
|
—
|
|
|
250,000
|
|
||||||
Definite life intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Subscriber relationships
|
9 years
|
|
380,000
|
|
|
(305,755
|
)
|
|
74,245
|
|
|
380,000
|
|
|
(271,372
|
)
|
|
108,628
|
|
||||||
Licensing agreements
|
9.1 years
|
|
45,289
|
|
|
(23,290
|
)
|
|
21,999
|
|
|
45,289
|
|
|
(19,604
|
)
|
|
25,685
|
|
||||||
Proprietary software
|
6 years
|
|
16,552
|
|
|
(13,973
|
)
|
|
2,579
|
|
|
16,552
|
|
|
(13,384
|
)
|
|
3,168
|
|
||||||
Developed technology
|
10 years
|
|
2,000
|
|
|
(1,283
|
)
|
|
717
|
|
|
2,000
|
|
|
(1,083
|
)
|
|
917
|
|
||||||
Leasehold interests
|
7.4 years
|
|
132
|
|
|
(114
|
)
|
|
18
|
|
|
132
|
|
|
(96
|
)
|
|
36
|
|
||||||
Due to the acquisition of the connected vehicle business of Agero:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Definite life intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
OEM relationships
|
15 years
|
|
220,000
|
|
|
(17,111
|
)
|
|
202,889
|
|
|
220,000
|
|
|
(2,444
|
)
|
|
217,556
|
|
||||||
Proprietary software
|
10 years
|
|
10,663
|
|
|
(1,718
|
)
|
|
8,945
|
|
|
10,663
|
|
|
(245
|
)
|
|
10,418
|
|
||||||
Total intangible assets
|
|
|
$
|
3,008,290
|
|
|
$
|
(363,244
|
)
|
|
$
|
2,645,046
|
|
|
$
|
3,008,290
|
|
|
$
|
(308,228
|
)
|
|
$
|
2,700,062
|
|
FCC satellite licenses
|
|
Expiration year
|
SIRIUS FM-1
|
|
2017
|
SIRIUS FM-2
|
|
2017
|
SIRIUS FM-3
|
|
2017
|
SIRIUS FM-5
|
|
2017
|
SIRIUS FM-6
|
|
2022
|
XM-1
(1)
|
|
|
XM-3
|
|
2021
|
XM-4
|
|
2022
|
XM-5
|
|
2018
|
(1)
|
The FCC license for this satellite has expired. The FCC has granted us special temporary authority to operate this satellite and prepare it for deorbiting maneuvers.
|
Years ending December 31,
|
|
Amount
|
||
2015
|
|
$
|
51,700
|
|
2016
|
|
48,545
|
|
|
2017
|
|
34,882
|
|
|
2018
|
|
19,463
|
|
|
2019
|
|
19,026
|
|
|
Thereafter
|
|
137,776
|
|
|
Total definite life intangible assets, net
|
|
$
|
311,392
|
|
(10)
|
Interest Costs
|
|
For the Years Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
Interest costs charged to expense
|
$
|
269,010
|
|
|
$
|
204,671
|
|
|
$
|
265,321
|
|
Interest costs capitalized
|
480
|
|
|
26,445
|
|
|
31,982
|
|
|||
Total interest costs incurred
|
$
|
269,490
|
|
|
$
|
231,116
|
|
|
$
|
297,303
|
|
(11)
|
Property and Equipment
|
|
December 31,
2014 |
|
December 31,
2013 |
||||
Satellite system
|
$
|
2,397,611
|
|
|
$
|
2,407,423
|
|
Terrestrial repeater network
|
108,341
|
|
|
109,367
|
|
||
Leasehold improvements
|
48,677
|
|
|
46,173
|
|
||
Broadcast studio equipment
|
61,306
|
|
|
59,020
|
|
||
Capitalized software and hardware
|
340,738
|
|
|
298,267
|
|
||
Satellite telemetry, tracking and control facilities
|
71,268
|
|
|
63,944
|
|
||
Furniture, fixtures, equipment and other
|
78,237
|
|
|
67,275
|
|
||
Land
|
38,411
|
|
|
38,411
|
|
||
Building
|
59,373
|
|
|
58,662
|
|
||
Construction in progress
|
155,716
|
|
|
103,148
|
|
||
Total property and equipment
|
3,359,678
|
|
|
3,251,690
|
|
||
Accumulated depreciation and amortization
|
(1,849,566
|
)
|
|
(1,657,116
|
)
|
||
Property and equipment, net
|
$
|
1,510,112
|
|
|
$
|
1,594,574
|
|
|
December 31,
2014 |
|
December 31,
2013 |
||||
Satellite system
|
$
|
12,912
|
|
|
$
|
11,879
|
|
Terrestrial repeater network
|
48,406
|
|
|
30,078
|
|
||
Capitalized software
|
77,755
|
|
|
39,924
|
|
||
Other
|
16,643
|
|
|
21,267
|
|
||
Construction in progress
|
$
|
155,716
|
|
|
$
|
103,148
|
|
Satellite Designation
|
|
Year Delivered
|
|
Estimated End of
Depreciable Life
|
FM-1*
|
|
2000
|
|
2013
|
FM-2*
|
|
2000
|
|
2013
|
FM-3
|
|
2000
|
|
2015
|
FM-5
|
|
2009
|
|
2024
|
FM-6
|
|
2013
|
|
2028
|
XM-1*
|
|
2001
|
|
2013
|
XM-3
|
|
2005
|
|
2020
|
XM-4
|
|
2006
|
|
2021
|
XM-5
|
|
2010
|
|
2025
|
(12)
|
Related Party Transactions
|
|
Related party current assets
|
|
Related party long-term assets
|
|
Related party current liabilities
|
|
Related party current debt
|
|
Related party long-term liabilities
|
||||||||||||||||||||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||||||||||||||
Liberty Media
|
$
|
—
|
|
|
$
|
278
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
15,766
|
|
|
$
|
—
|
|
|
$
|
10,959
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Sirius XM Canada
|
4,344
|
|
|
8,867
|
|
|
3,000
|
|
|
27,619
|
|
|
4,340
|
|
|
4,554
|
|
|
—
|
|
|
—
|
|
|
13,635
|
|
|
16,337
|
|
||||||||||
M-Way
|
—
|
|
|
—
|
|
|
—
|
|
|
2,545
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||||
Total
|
$
|
4,344
|
|
|
$
|
9,145
|
|
|
$
|
3,000
|
|
|
$
|
30,164
|
|
|
$
|
4,340
|
|
|
$
|
20,320
|
|
|
$
|
—
|
|
|
$
|
10,959
|
|
|
$
|
13,635
|
|
|
$
|
16,337
|
|
|
For the Years Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
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.
|
(b)
|
During the
year ended
December 31, 2014
, our share of Sirius XM Canada’s net earnings included a gain of
$1,251
related to the fair value received in excess of the carrying value associated with the redemption of our investment in Sirius XM Canada’s
8%
convertible unsecured subordinated debentures in February 2014. Sirius XM Canada declared dividends to us of
$43,492
,
$16,796
and
$7,749
during the
years ended
December 31, 2014
,
2013
and
2012
, respectively. These dividends are first recorded as a reduction to our investment balance in Sirius XM Canada to the extent a balance exists and then as
Interest and investment income
for the remaining portion. This amount includes amortization related to the equity method intangible assets of
$363
,
$1,454
and
$974
for the
years ended
December 31, 2014
,
2013
and
2012
, respectively.
|
(c)
|
We recognized Interest expense associated with the portion of the 7% Exchangeable Senior Subordinated Notes due 2014, the portion of the
7.625%
Senior Notes due 2018, and the portion of the
8.75%
Senior Notes due 2015 held by Liberty Media through December 2014, October 2013 and August 2013, respectively.
|
(13)
|
Investments
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying value at
|
||||||||
Issuer / Borrower
|
|
Issued
|
|
Debt
|
|
Maturity Date
|
|
Interest Payable
|
|
Principal Amount
|
|
December 31, 2014
|
|
December 31, 2013
|
||||||
Sirius XM
(a)
|
|
August 2008
|
|
7% Exchangeable
Senior Subordinated Notes (the "Exchangeable Notes") |
|
December 1, 2014
|
|
semi-annually on June 1 and December 1
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
500,481
|
|
Sirius XM
(a)(b) |
|
May 2013
|
|
4.25% Senior Notes
(the "4.25% Notes")
|
|
May 15, 2020
|
|
semi-annually on May 15 and November 15
|
|
500,000
|
|
|
495,529
|
|
|
494,809
|
|
|||
Sirius XM
(a)(b) |
|
September 2013
|
|
5.875% Senior Notes
(the "5.875% Notes")
|
|
October 1, 2020
|
|
semi-annually on April 1 and October 1
|
|
650,000
|
|
|
643,790
|
|
|
642,914
|
|
|||
Sirius XM
(a)(b) |
|
August 2013
|
|
5.75% Senior Notes
(the "5.75% Notes")
|
|
August 1, 2021
|
|
semi-annually on February 1 and August 1
|
|
600,000
|
|
|
595,091
|
|
|
594,499
|
|
|||
Sirius XM
(a)(b) |
|
May 2013
|
|
4.625% Senior Notes
(the "4.625% Notes")
|
|
May 15, 2023
|
|
semi-annually on May 15 and November 15
|
|
500,000
|
|
|
495,116
|
|
|
494,653
|
|
|||
Sirius XM
(a)(b)(c) |
|
May 2014
|
|
6.00% Senior Notes
(the "6.00% Notes")
|
|
July 15, 2024
|
|
semi-annually on January 15 and July 15
|
|
1,500,000
|
|
|
1,483,918
|
|
|
—
|
|
|||
Sirius XM
(a)(b)(d) |
|
August 2012
|
|
5.25% Senior Secured Notes (the "5.25% Notes")
|
|
August 15, 2022
|
|
semi-annually on February 15 and August 15
|
|
400,000
|
|
|
395,147
|
|
|
394,648
|
|
|||
Sirius XM
(e) |
|
December 2012
|
|
Senior Secured Revolving Credit Facility (the "Credit Facility")
|
|
December 5, 2017
|
|
variable fee paid quarterly
|
|
1,250,000
|
|
|
380,000
|
|
|
460,000
|
|
|||
Sirius XM
|
|
Various
|
|
Capital leases
|
|
Various
|
|
n/a
|
|
n/a
|
|
|
12,754
|
|
|
19,591
|
|
|||
Total Debt
|
|
4,501,345
|
|
|
3,601,595
|
|
||||||||||||||
Less: total current maturities non-related party
|
|
7,482
|
|
|
496,815
|
|
||||||||||||||
Less: total current maturities related party
|
|
—
|
|
|
10,959
|
|
||||||||||||||
Total long-term debt
|
|
$
|
4,493,863
|
|
|
$
|
3,093,821
|
|
(a)
|
The carrying value of the notes are net of the remaining unamortized original issue discount.
|
(b)
|
Substantially all of our domestic wholly-owned subsidiaries have guaranteed these notes.
|
(c)
|
In May 2014, Sirius XM issued
$1,500,000
aggregate principal amount of
6.00%
Senior Notes due
2024
, with an original issuance discount of
$16,875
.
|
(d)
|
In April 2014, we entered into a supplemental indenture to the indenture governing the 5.25% Notes pursuant to which we granted a first priority lien on substantially all of the assets of Sirius XM and the guarantors to the holders of the 5.25% Notes. The liens securing the 5.25% Notes are equal and ratable to the liens granted to secure the Credit Facility.
|
(e)
|
In December 2012, Sirius XM entered into a
five
-year Credit Facility with a syndicate of financial institutions for
$1,250,000
. Sirius XM's obligations under the Credit Facility are guaranteed by certain of its material domestic subsidiaries and are secured by a lien on substantially all of Sirius XM's assets and the assets of its material domestic subsidiaries. Borrowings under the Credit Facility are used for working capital and other general corporate purposes, including dividends, financing of acquisitions and share
|
(15)
|
Stockholders’ Equity
|
|
December 31, 2014
|
|
December 31, 2013
|
||||||||||
Share Repurchase Type
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
||||||
Open Market and Privately Negotiated Repurchases (a)
|
422,965,443
|
|
|
$
|
1,426,428
|
|
|
476,545,601
|
|
|
$
|
1,602,360
|
|
Liberty Media (b)
|
92,888,561
|
|
|
340,000
|
|
|
43,712,265
|
|
|
160,000
|
|
||
May 2014 ASR Agreement (c)
|
151,846,125
|
|
|
506,404
|
|
|
—
|
|
|
—
|
|
||
August 2014 ASR Agreement (d)
|
71,316,503
|
|
|
250,000
|
|
|
—
|
|
|
—
|
|
||
Total Repurchases
|
739,016,632
|
|
|
$
|
2,522,832
|
|
|
520,257,866
|
|
|
$
|
1,762,360
|
|
(a)
|
As of
December 31, 2014
and
2013
,
$26,034
and
$0
, respectively, of common stock repurchases had not settled, nor been retired, and were recorded as Treasury stock within our consolidated balance sheets and consolidated statements of stockholders' equity.
|
(b)
|
On
October 9, 2013
, we entered into an agreement to repurchase
$500,000
of our common stock from Liberty Media. Pursuant to this agreement, we repurchased
43,712,265
shares of our common stock for
$160,000
from Liberty Media in
2013
. On April 25, 2014, we completed the final purchase installment and repurchased
92,888,561
shares of our common stock for
$340,000
from Liberty Media at a price of
$3.66
per share. As there were certain terms in the forward purchase contract with Liberty Media that could have caused the obligation not to be fulfilled, the instrument was classified as a liability and was marked to fair value with any gain or loss recorded to our consolidated statements of comprehensive income. We recognized
$34,485
and
$20,393
to
Loss on change in value of derivatives
in our consolidated statements of comprehensive income during the
years ended
December 31, 2014
and
2013
, respectively.
|
(c)
|
In May 2014, we entered into an accelerated share repurchase agreement (the "May ASR Agreement") under which we prepaid
$600,000
to a third-party financial institution to repurchase our common stock. Under the May ASR Agreement, we received
151,846,125
shares of our common stock that were retired upon receipt and the counter party returned to us
$93,596
for the unused portion of the original prepayment.
|
(d)
|
In August 2014, we entered into a second accelerated share repurchase agreement (the "August ASR Agreement") under which we prepaid
$250,000
to a third-party financial institution to repurchase our common stock. Under the August ASR Agreement, we received an aggregate of
71,316,503
shares of our common stock that were retired upon receipt.
|
(16)
|
Benefit Plans
|
|
For the Years Ended December 31,
|
||||
|
2014
|
|
2013
|
|
2012
|
Risk-free interest rate
|
1.6%
|
|
1.4%
|
|
0.8%
|
Expected life of options — years
|
4.72
|
|
4.73
|
|
5.06
|
Expected stock price volatility
|
33%
|
|
47%
|
|
49%
|
Expected dividend yield
|
0%
|
|
0%
|
|
0%
|
|
Options
|
|
Weighted-
Average
Exercise
Price
(1)
|
|
Weighted-Average
Remaining
Contractual Term
(Years)
|
|
Aggregate
Intrinsic
Value
|
|||||
Outstanding at the beginning of January 1, 2012
|
439,580
|
|
|
$
|
1.25
|
|
|
|
|
|
||
Granted
|
58,626
|
|
|
$
|
2.53
|
|
|
|
|
|
||
Exercised
|
(214,199
|
)
|
|
$
|
0.59
|
|
|
|
|
|
||
Forfeited, cancelled or expired
|
(9,495
|
)
|
|
$
|
3.09
|
|
|
|
|
|
||
Outstanding as of December 31, 2012
|
274,512
|
|
|
$
|
1.92
|
|
|
|
|
|
||
Granted
|
57,228
|
|
|
$
|
3.59
|
|
|
|
|
|
||
Exercised
|
(61,056
|
)
|
|
$
|
1.31
|
|
|
|
|
|
||
Forfeited, cancelled or expired
|
(6,445
|
)
|
|
$
|
2.02
|
|
|
|
|
|
||
Outstanding as of December 31, 2013
|
264,239
|
|
|
$
|
2.42
|
|
|
|
|
|
||
Granted
|
61,852
|
|
|
$
|
3.39
|
|
|
|
|
|
||
Exercised
|
(46,943
|
)
|
|
$
|
1.63
|
|
|
|
|
|
||
Forfeited, cancelled or expired
|
(11,294
|
)
|
|
$
|
4.08
|
|
|
|
|
|
||
Outstanding as of December 31, 2014
|
267,854
|
|
|
$
|
2.72
|
|
|
7.09
|
|
$
|
246,067
|
|
Exercisable as of December 31, 2014
|
121,272
|
|
|
$
|
2.27
|
|
|
5.28
|
|
$
|
179,913
|
|
(1)
|
The weighted-average exercise price for options outstanding as of
December 31, 2012
in the table above has been adjusted to reflect the reduction to the exercise prices related to the December 28, 2012 special cash dividend.
|
(17)
|
Commitments and Contingencies
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
|
2019
|
|
Thereafter
|
|
Total
|
||||||||||||||
Debt obligations
|
$
|
7,482
|
|
|
$
|
4,266
|
|
|
$
|
380,928
|
|
|
$
|
78
|
|
|
$
|
—
|
|
|
$
|
4,150,000
|
|
|
$
|
4,542,754
|
|
Cash interest payments
|
240,874
|
|
|
240,551
|
|
|
240,803
|
|
|
228,063
|
|
|
228,063
|
|
|
711,750
|
|
|
1,890,104
|
|
|||||||
Satellite and transmission
|
15,364
|
|
|
4,594
|
|
|
3,643
|
|
|
4,170
|
|
|
4,187
|
|
|
12,719
|
|
|
44,677
|
|
|||||||
Programming and content
|
231,272
|
|
|
109,903
|
|
|
74,816
|
|
|
60,150
|
|
|
48,333
|
|
|
60,000
|
|
|
584,474
|
|
|||||||
Marketing and distribution
|
31,645
|
|
|
13,114
|
|
|
9,185
|
|
|
8,298
|
|
|
6,218
|
|
|
1,538
|
|
|
69,998
|
|
|||||||
Satellite incentive payments
|
11,511
|
|
|
12,367
|
|
|
13,296
|
|
|
14,302
|
|
|
10,652
|
|
|
43,527
|
|
|
105,655
|
|
|||||||
Operating lease obligations
|
49,408
|
|
|
43,634
|
|
|
36,636
|
|
|
34,036
|
|
|
29,224
|
|
|
200,884
|
|
|
393,822
|
|
|||||||
Other
|
66,462
|
|
|
13,829
|
|
|
2,479
|
|
|
895
|
|
|
150
|
|
|
50
|
|
|
83,865
|
|
|||||||
Total
(1)
|
$
|
654,018
|
|
|
$
|
442,258
|
|
|
$
|
761,786
|
|
|
$
|
349,992
|
|
|
$
|
326,827
|
|
|
$
|
5,180,468
|
|
|
$
|
7,715,349
|
|
(1)
|
The table does not include our reserve for uncertain tax positions, which at
December 31, 2014
totaled
$1,432
, as the specific timing of any cash payments cannot be projected with reasonable certainty.
|
(18)
|
Income Taxes
|
|
For the Years Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
Current taxes:
|
|
|
|
|
|
||||||
Federal
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
State
|
(7,743
|
)
|
|
(5,359
|
)
|
|
(1,319
|
)
|
|||
Foreign
|
(2,341
|
)
|
|
5,269
|
|
|
(2,265
|
)
|
|||
Total current taxes
|
(10,084
|
)
|
|
(90
|
)
|
|
(3,584
|
)
|
|||
Deferred taxes:
|
|
|
|
|
|
||||||
Federal
|
(302,350
|
)
|
|
(211,044
|
)
|
|
2,729,823
|
|
|||
State
|
(25,111
|
)
|
|
(48,743
|
)
|
|
271,995
|
|
|||
Total deferred taxes
|
(327,461
|
)
|
|
(259,787
|
)
|
|
3,001,818
|
|
|||
Total income tax (expense) benefit
|
$
|
(337,545
|
)
|
|
$
|
(259,877
|
)
|
|
$
|
2,998,234
|
|
|
For the Years Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
Federal tax expense, at statutory rate
|
$
|
(290,775
|
)
|
|
$
|
(222,982
|
)
|
|
$
|
(166,064
|
)
|
State income tax expense, net of federal benefit
|
(32,067
|
)
|
|
(19,031
|
)
|
|
(16,606
|
)
|
|||
State income rate changes
|
5,334
|
|
|
(8,666
|
)
|
|
(2,251
|
)
|
|||
Non-deductible expenses
|
(13,914
|
)
|
|
(9,545
|
)
|
|
(477
|
)
|
|||
Change in valuation allowance
|
2,836
|
|
|
4,228
|
|
|
3,195,651
|
|
|||
Other, net
|
(8,959
|
)
|
|
(3,881
|
)
|
|
(12,019
|
)
|
|||
Income tax (expense) benefit
|
$
|
(337,545
|
)
|
|
$
|
(259,877
|
)
|
|
$
|
2,998,234
|
|
|
For the Years Ended December 31,
|
||||||
|
2014
|
|
2013
|
||||
Deferred tax assets:
|
|
|
|
||||
Net operating loss carryforwards
|
$
|
1,818,719
|
|
|
$
|
2,207,583
|
|
GM payments and liabilities
|
539
|
|
|
1,984
|
|
||
Deferred revenue
|
691,323
|
|
|
606,430
|
|
||
Severance accrual
|
271
|
|
|
388
|
|
||
Accrued bonus
|
28,170
|
|
|
25,830
|
|
||
Expensed costs capitalized for tax
|
19,624
|
|
|
22,679
|
|
||
Deferred financing costs
|
958
|
|
|
664
|
|
||
Investments
|
46,751
|
|
|
45,078
|
|
||
Stock based compensation
|
79,296
|
|
|
71,794
|
|
||
Other
|
36,597
|
|
|
31,735
|
|
||
Total deferred tax assets
|
2,722,248
|
|
|
3,014,165
|
|
||
Deferred tax liabilities:
|
|
|
|
||||
Depreciation of property and equipment
|
(237,971
|
)
|
|
(188,675
|
)
|
||
FCC license
|
(789,857
|
)
|
|
(778,152
|
)
|
||
Other intangible assets
|
(213,086
|
)
|
|
(233,983
|
)
|
||
Total deferred tax liabilities
|
(1,240,914
|
)
|
|
(1,200,810
|
)
|
||
Net deferred tax assets before valuation allowance
|
1,481,334
|
|
|
1,813,355
|
|
||
Valuation allowance
|
(4,995
|
)
|
|
(7,831
|
)
|
||
Total net deferred tax asset
|
$
|
1,476,339
|
|
|
$
|
1,805,524
|
|
|
2014
|
|
2013
|
||||
Balance, beginning of year
|
$
|
1,432
|
|
|
$
|
1,432
|
|
Additions for tax positions from prior years
|
—
|
|
|
—
|
|
||
Balance, end of year
|
$
|
1,432
|
|
|
$
|
1,432
|
|
(19)
|
Subsequent Events
|
|
For the Three Months Ended
|
||||||||||||||
|
March 31
|
|
June 30
|
|
September 30
|
|
December 31
|
||||||||
2014
|
|
|
|
|
|
|
|
||||||||
Total revenue
|
$
|
997,711
|
|
|
$
|
1,035,345
|
|
|
$
|
1,057,087
|
|
|
$
|
1,090,952
|
|
Cost of services
|
$
|
(390,534
|
)
|
|
$
|
(393,185
|
)
|
|
$
|
(403,519
|
)
|
|
$
|
(421,098
|
)
|
Income from operations
|
$
|
247,407
|
|
|
$
|
284,578
|
|
|
$
|
294,028
|
|
|
$
|
293,657
|
|
Net income
|
$
|
93,988
|
|
|
$
|
119,961
|
|
|
$
|
136,170
|
|
|
$
|
143,122
|
|
Net income per common share--basic
|
$
|
0.02
|
|
|
$
|
0.02
|
|
|
$
|
0.02
|
|
|
$
|
0.03
|
|
Net income per common share--diluted
(1)
|
$
|
0.02
|
|
|
$
|
0.02
|
|
|
$
|
0.02
|
|
|
$
|
0.03
|
|
2013
|
|
|
|
|
|
|
|
||||||||
Total revenue
|
$
|
897,398
|
|
|
$
|
940,110
|
|
|
$
|
961,509
|
|
|
$
|
1,000,078
|
|
Cost of services
|
$
|
(330,257
|
)
|
|
$
|
(331,465
|
)
|
|
$
|
(336,464
|
)
|
|
$
|
(396,304
|
)
|
Income from operations
|
$
|
246,931
|
|
|
$
|
267,736
|
|
|
$
|
284,529
|
|
|
$
|
245,357
|
|
Net income
|
$
|
123,602
|
|
|
$
|
125,522
|
|
|
$
|
62,894
|
|
|
$
|
65,197
|
|
Net income per common share--basic
|
$
|
0.02
|
|
|
$
|
0.02
|
|
|
$
|
0.01
|
|
|
$
|
0.01
|
|
Net income per common share--diluted
|
$
|
0.02
|
|
|
$
|
0.02
|
|
|
$
|
0.01
|
|
|
$
|
0.01
|
|
(1)
|
The sum of quarterly net income per share applicable to common stockholders (diluted) does not necessarily agree to the net income per share for the year due to the timing of common stock issuances.
|
(in thousands)
|
Balance January 1,
|
|
Charged to Expenses (Benefit)
|
|
Write-offs/ Payments/ Other
|
|
Balance December 31,
|
||||||
Description
|
|
|
|
|
|
|
|
||||||
2014
|
|
|
|
|
|
|
|
||||||
Allowance for doubtful accounts
|
$
|
9,078
|
|
|
44,961
|
|
|
(46,224
|
)
|
|
$
|
7,815
|
|
Deferred tax assets—valuation allowance
|
$
|
7,831
|
|
|
(2,836
|
)
|
|
—
|
|
|
$
|
4,995
|
|
Allowance for obsolescence
|
$
|
14,218
|
|
|
(335
|
)
|
|
(3,159
|
)
|
|
$
|
10,724
|
|
2013
|
|
|
|
|
|
|
|
||||||
Allowance for doubtful accounts
|
$
|
11,711
|
|
|
39,016
|
|
|
(41,649
|
)
|
|
$
|
9,078
|
|
Deferred tax assets—valuation allowance
|
$
|
9,835
|
|
|
(4,228
|
)
|
|
2,224
|
|
|
$
|
7,831
|
|
Allowance for obsolescence
|
$
|
16,159
|
|
|
(773
|
)
|
|
(1,168
|
)
|
|
$
|
14,218
|
|
2012
|
|
|
|
|
|
|
|
||||||
Allowance for doubtful accounts
|
$
|
9,932
|
|
|
34,548
|
|
|
(32,769
|
)
|
|
$
|
11,711
|
|
Deferred tax assets—valuation allowance
|
$
|
3,360,740
|
|
|
(3,195,651
|
)
|
|
(155,254
|
)
|
|
$
|
9,835
|
|
Allowance for obsolescence
|
$
|
15,430
|
|
|
4,430
|
|
|
(3,701
|
)
|
|
$
|
16,159
|
|
Exhibit
|
|
|
Description
|
||
|
|
|
|
||
2.1
|
|
|
Certificate of Ownership and Merger, dated as of January 12, 2011, merging XM Satellite Radio Inc. with and into Sirius XM Radio Inc. (incorporated by reference to Exhibit 3.1 to Sirius XM Radio Inc.’s Current Report on Form 8-K filed on January 12, 2011).
|
||
|
|
|
|||
2.2
|
|
|
Agreement and Plan of Merger, dated as of November 14, 2013, by and among Sirius XM Radio Inc., Sirius XM Holdings Inc. and Sirius XM Merger Sub Inc. (incorporated by reference to Exhibit 2.1 to Sirius XM Holdings Inc.’s Current Report on Form 8-K filed on November 15, 2013).
|
||
|
|
|
|||
3.1
|
|
|
Amended and Restated Certificate of Incorporation of Sirius XM Holdings Inc. (incorporated by reference to Exhibit 3.1 to Sirius XM Holdings Inc.’s Current Report on Form 8-K filed on November 15, 2013).
|
||
|
|
|
|||
3.2
|
|
|
Amended and Restated By-Laws of Sirius XM Holdings Inc. (incorporated by reference to Exhibit 3.2 to Sirius XM Holdings Inc.'s Current Report on Form 8-K filed on November 15, 2013).
|
||
|
|
|
|||
4.1
|
|
|
Form of certificate for shares of Sirius XM Holdings Inc.’s common stock (incorporated by reference to Exhibit 4.1 to Sirius XM Holdings Inc.'s Annual Report on Form 10-K for the year ended December 31, 2013).
|
||
|
|
|
|||
4.2
|
|
|
Indenture, dated as of August 13, 2012, among Sirius XM Radio Inc., the guarantors thereto and U.S. Bank National Association, as trustee, relating to Sirius XM Radio Inc.’s 5.25% Senior Secured Notes due 2022 (incorporated by reference to Sirius XM Radio Inc.’s Current Report on Form 8-K filed on August 14, 2012).
|
||
|
|
|
|||
4.3
|
|
|
Supplemental Indenture, dated as of April 10, 2014, among Sirius XM Radio Inc., the guarantors named therein and U.S. Bank National Association, as trustee, relating to the 5.25% Senior Secured Notes due 2022 (incorporated by reference to Exhibit 4.1 to Sirius XM Holdings Inc.’s Current Report on Form 8-K filed on April 10, 2014).
|
||
4.4
|
|
|
Indenture, dated as of May 16, 2013, among Sirius XM Radio Inc., the guarantors named therein and U.S. Bank National Association, as trustee, relating to the 4.25% Senior Notes due 2020 (incorporated by reference to Exhibit 4.1 to Sirius XM Radio Inc.’s Current Report on Form 8-K filed on May 20, 2013).
|
||
|
|
|
|||
4.5
|
|
|
Indenture, dated as of May 16, 2013, among Sirius XM Radio Inc., the guarantors named therein and U.S. Bank National Association, as trustee, relating to the 4.625% Senior Notes due 2023 (incorporated by reference to Exhibit 4.2 to Sirius XM Radio Inc.’s Current Report on Form 8-K filed on May 20, 2013).
|
||
|
|
|
|||
4.6
|
|
|
Indenture, dated as of August 1, 2013, among Sirius XM Radio Inc., the guarantors named therein and U.S. Bank National Association, as trustee, relating to the 5.75% Senior Notes due 2021 (incorporated by reference to Exhibit 4.1 to Sirius XM Radio Inc.’s Current Report on Form 8-K filed on August 1, 2013).
|
||
|
|
|
|||
4.7
|
|
|
Indenture, dated as of September 24, 2013, among Sirius XM Radio Inc., the guarantors named therein and U.S. Bank National Association, as trustee, relating to the 5.875% Senior Notes due 2020 (incorporated by reference to Exhibit 4.1 to Sirius XM Radio Inc.’s Current Report on Form 8-K filed on September 25, 2013).
|
||
4.8
|
|
|
Indenture, dated as of May 6, 2014, among Sirius XM Radio Inc., the guarantors named therein and U.S. Bank National Association, as trustee, relating to the 6.00% Senior Notes due 2024 (incorporated by reference to Exhibit 4.1 to Sirius XM Holdings Inc.’s Current Report on Form 8-K filed on May 7, 2014).
|
||
|
|
|
|||
4.9
|
|
|
Form of Common Stock Purchase Warrant, dated as of January 27, 2009, issued by Sirius XM Radio Inc. to NFL Enterprises LLC (incorporated by reference to Exhibit 4.48 to Sirius XM Radio Inc.’s Annual Report on Form 10-K for the year ended December 31, 2008).
|
||
|
|
|
|||
4.10
|
|
|
Sirius XM Holdings Inc.’s Assumption of NFL Enterprises LLC Warrant, dated as of November 15, 2013 (incorporated by reference to Exhibit 4.13 to Sirius XM Holdings Inc.'s Annual Report on Form 10-K for the year ended December 31, 2013).
|
||
|
|
|
|||
4.11
|
|
|
Investment Agreement, dated as of February 17, 2009, between Sirius XM Radio Inc. and Liberty Radio LLC (incorporated by reference to Exhibit 4.55 to Sirius XM Radio Inc.’s Annual Report on Form 10-K for the year ended December 31, 2008).
|
||
|
|
|
|||
4.12
|
|
|
Assignment and Assumption of Investment Agreement among Sirius XM Radio Inc., Sirius XM Holdings Inc. and Liberty Radio LLC, dated as of November 15, 2013 (incorporated by reference to Exhibit 4.15 to Sirius XM Holdings Inc.'s Annual Report on Form 10-K for the year ended December 31, 2013).
|
||
|
|
|
Exhibit
|
|
|
Description
|
||
10.1
|
|
|
Credit Agreement, dated as of December 5, 2012, among Sirius XM Radio Inc., JPMorgan Chase Bank, N.A. as administrative agent, and the other agents and lenders party thereto (incorporated by reference to Sirius XM Radio Inc.’s Current Report on Form 8-K filed on December 10, 2012).
|
||
|
|
|
|||
10.2
|
|
|
Amendment No. 1, dated as of April 22, 2014, to the Credit Agreement, dated as of December 5, 2012, among Sirius XM Radio Inc., the Lenders party thereto and JPMorgan Chase Bank, N.A. as administrative agent for the Lenders, as collateral agent for the Secured Parties and as an Issuing Bank (incorporated by reference to Exhibit 10.1 to Sirius XM Holdings Inc.’s Current Report on Form 8-K filed on April 22, 2014).
|
||
|
|
|
|||
**10.3
|
|
|
Technology Licensing Agreement among XM Satellite Radio Inc., XM Satellite Radio Holdings Inc., WorldSpace Management Corporation and American Mobile Satellite Corporation, dated as of January 1, 1998, amended by Amendment No. 1 to Technology Licensing Agreement (incorporated by reference to Exhibit 10.3 to XM Satellite Radio Holdings Inc.’s Annual Report on Form 10-K for the year ended December 31, 2007).
|
||
|
|
|
|||
**10.4
|
|
|
Third Amended and Restated Distribution and Credit Agreement, dated as of February 6, 2008, among General Motors Corporation, XM Satellite Radio Holdings Inc. and XM Satellite Radio Inc. (incorporated by reference to Exhibit 10.63 to XM Satellite Radio Holdings Inc.’s Annual Report on Form 10-K for the year ended December 31, 2007).
|
||
|
|
|
|||
**10.5
|
|
|
Third Amended and Restated Satellite Purchase Contract for In-Orbit Delivery, dated as of May 15, 2001, between XM Satellite Radio Inc. and Boeing Satellite Systems International, Inc. (incorporated by reference to Exhibit 10.36 to Amendment No. 1 to XM Satellite Radio Holdings Inc.’s Registration Statement on Form S-3 (File No. 333-89132)).
|
||
|
|
|
|||
**10.6
|
|
|
Amended and Restated Amendment to the Satellite Purchase Contract for In-Orbit Delivery, dated May 22, 2003, among XM Satellite Radio Inc., XM Satellite Radio Holdings Inc. and Boeing Satellite Systems International, Inc. (incorporated by reference to Exhibit 10.53 to XM Satellite Radio Holdings Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2003).
|
||
|
|
|
|||
**10.7
|
|
|
Amendment to the Satellite Purchase Contract for In-Orbit Delivery, dated July 31, 2003, among XM Satellite Radio Inc., XM Satellite Radio Holdings Inc. and Boeing Satellite Systems International, Inc. (incorporated by reference to Exhibit 10.54 to XM Satellite Radio Holdings Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2003).
|
||
|
|
|
|||
**10.8
|
|
|
Amendment to the Satellite Purchase Contract for In-Orbit Delivery, dated December 19, 2003, among XM Satellite Radio Inc., XM Satellite Radio Holdings Inc. and Boeing Satellite Systems International, Inc. (incorporated by reference to Exhibit 10.57 to XM Satellite Radio Holdings Inc.’s Annual Report on Form 10-K for the year ended December 31, 2003).
|
||
|
|
|
|||
*10.9
|
|
|
Amended and Restated Sirius Satellite Radio 2003 Long-Term Stock Incentive Plan (incorporated by reference to Exhibit 10.10 to Sirius XM Radio Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2004).
|
||
|
|
|
|||
*10.10
|
|
|
Form of Stock Option Agreement between CD Radio Inc. and each Optionee (incorporated by reference to Exhibit 10.16.2 to Sirius XM Radio Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1998).
|
||
|
|
|
|||
*10.11
|
|
|
CD Radio Inc. 401(k) Savings Plan (incorporated by reference to Exhibit 4.4 to CD Radio Inc.’s Registration Statement on Form S-8 (File No. 333-65473)).
|
||
|
|
|
|||
*10.12
|
|
|
XM Satellite Radio Holdings Inc. 2007 Stock Incentive Plan (incorporated by reference to Exhibit 10.5 to XM Satellite Radio Holdings Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2007).
|
||
|
|
|
|||
*10.13
|
|
|
Form of Non-Qualified Stock Option Agreement pursuant to the XM Satellite Radio Holdings Inc. 2007 Stock Incentive Plan (incorporated by reference to Exhibit 10.2 to XM Satellite Radio Holdings Inc.’s Current Report on Form 8-K filed June 1, 2007).
|
||
|
|
|
|||
*10.14
|
|
|
Form of Restricted Stock Agreement pursuant to the XM Satellite Radio Holdings Inc. 2007 Stock Incentive Plan (incorporated by reference to Exhibit 10.3 to XM Satellite Radio Holdings Inc.’s Current Report on Form 8-K filed June 1, 2007).
|
||
|
|
|
|||
*10.15
|
|
|
Sirius XM Radio 401(k) Savings Plan, January 1, 2009 Restatement (incorporated by reference to Exhibit 10.30 to Sirius XM Radio Inc.’s Annual Report on Form 10-K for the year ended December 31, 2009).
|
||
|
|
|
|||
*10.16
|
|
|
Sirius XM Radio Inc. 2009 Long-Term Stock Incentive Plan (incorporated by reference to Exhibit 4.9 to Sirius XM Radio Inc.’s Registration Statement on Form S-8 (File No. 333- 160386)).
|
||
|
|
|
Exhibit
|
|
|
Description
|
||
*10.17
|
|
|
Form of Director Non-Qualified Stock Option Agreement pursuant to the Sirius XM Radio Inc. 2009 Long-Term Stock Incentive Plan (incorporated by reference to Exhibit 10.34 to Sirius XM Radio Inc.’s Annual Report on Form 10-K for the year ended December 31, 2011).
|
||
|
|
|
|||
*10.18
|
|
|
Form of Director Non-Qualified Stock Option Agreement pursuant to the Sirius XM Holdings Inc. 2009 Long-Term Stock Incentive Plan (filed herewith).
|
||
|
|
|
|||
*10.19
|
|
|
Form of Non-Qualified Stock Option Agreement pursuant to the Sirius XM Radio Inc. 2009 Long-Term Stock Incentive Plan (incorporated by reference to Exhibit 10.35 to Sirius XM Radio Inc.’s Annual Report on Form 10-K for the year ended December 31, 2011).
|
||
|
|
|
|||
*10.20
|
|
|
Form of Non-Qualified Stock Option Agreement pursuant to the Sirius XM Holdings Inc. 2009 Long-Term Stock Incentive Plan (filed herewith).
|
||
|
|
|
|||
*10.21
|
|
|
Employment Agreement, dated as of July 21, 2011, between Sirius XM Radio Inc. and David J. Frear (incorporated by reference to Exhibit 10.1 to Sirius XM Radio Inc.’s Current Report on Form 8-K filed on July 22, 2011).
|
||
|
|
|
|||
*10.22
|
|
|
Form of Option Award Agreement between Sirius XM Radio Inc. and James E. Meyer (incorporated by reference to Exhibit 10.1 to Sirius XM Radio Inc.’s Current Report on Form 8-K filed October 16, 2009).
|
||
|
|
|
|||
*10.23
|
|
|
Employment Agreement, dated as of April 29, 2013, between Sirius XM Radio Inc. and James E. Meyer (incorporated by reference to Exhibit 10.1 to Sirius XM Radio Inc.’s Current Report on Form 8-K dated April 30, 2013).
|
||
|
|
|
|||
*10.24
|
|
|
Employment Agreement, dated as of July 22, 2013, between Sirius XM Radio Inc. and Scott A. Greenstein (incorporated by reference to Exhibit 10.1 to Sirius XM Radio Inc.’s Current Report on Form 8-K dated July 23, 2013).
|
||
|
|
|
|||
*10.25
|
|
|
Form of Option Award Agreement between Sirius XM Radio Inc. and Patrick L. Donnelly (incorporated by reference to Exhibit 10.1 to Sirius XM Radio Inc.’s Current Report on Form 8-K filed January 15, 2010).
|
||
|
|
|
|||
*10.26
|
|
|
Employment Agreement, dated as of January 10, 2014, between Sirius XM Radio Inc. and Patrick L. Donnelly (incorporated by reference to Exhibit 10.1 to Sirius XM Holdings Inc.’s Current Report on Form 8-K filed on January 14, 2014).
|
||
|
|
|
|||
*10.27
|
|
|
Assignment and Assumption Agreement, dated as of November 15, 2013, among Sirius XM Holdings Inc. and Sirius XM Radio Inc. (incorporated by reference to Exhibit 10.1 to Sirius XM Holdings Inc.’s Current Report on Form 8-K filed on November 15, 2013).
|
||
|
|
|
|||
*10.28
|
|
|
Omnibus Amendment, dated November 15, 2013, to the XM Satellite Radio Holdings Inc. Talent Option Plan, the XM Satellite Radio Holdings Inc. 1998 Shares Award Plan, as amended, the Amended and Restated Sirius Satellite Radio 2003 Long-Term Stock Incentive Plan, the XM Satellite Radio Holdings Inc. 2007 Stock Incentive Plan and the Sirius XM Radio Inc. 2009 Long-Term Stock Incentive Plan and their Related Stock Option Agreements, Restricted Stock Agreements and Restricted Stock Unit Agreements (incorporated by reference to Exhibit 10.2 to Sirius XM Holdings Inc.’s Current Report on Form 8-K filed on November 15, 2013).
|
||
|
|
|
|||
21.1
|
|
|
List of Subsidiaries (filed herewith).
|
||
|
|
|
|||
23.1
|
|
|
Consent of KPMG LLP (filed herewith).
|
||
|
|
|
|||
31.1
|
|
|
Certificate of James E. Meyer, Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
|
||
|
|
|
|||
31.2
|
|
|
Certificate of David J. Frear, Executive Vice President and Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
|
||
|
|
|
|||
32.1
|
|
|
Certificate of James E. Meyer, Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).
|
||
|
|
|
|||
32.2
|
|
|
Certificate of David J. Frear, Executive Vice President and Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).
|
||
|
|
|
|||
99.1
|
|
|
Amended and Restated Certificate of Incorporation of Sirius XM Radio Inc., as amended (incorporated by reference to Exhibit 3.3 to Sirius XM Holdings Inc.'s Annual Report on Form 10-K for the year ended December 31, 2013).
|
Exhibit
|
|
|
Description
|
||
99.2
|
|
|
Amended and Restated By-Laws of Sirius XM Radio Inc., as amended (incorporated by reference to Exhibit 3.4 to Sirius XM Holdings Inc.'s Annual Report on Form 10-K for the year ended December 31, 2013).
|
||
|
|
|
|||
101.1
|
|
|
The following financial information from our Annual Report on Form 10-K for the year ended December 31, 2014 formatted in eXtensible Business Reporting Language (XBRL): (i) Consolidated Statements of Comprehensive Income for the years ended December 31, 2014, 2013 and 2012; (ii) Consolidated Balance Sheets as of December 31, 2014 and 2013; (iii) Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2014, 2013 and 2012; (iv) Consolidated Statements of Cash Flows for the years ended December 31, 2014, 2013 and 2012; and (v) Combined Notes to Consolidated Financial Statements.
|
*
|
This document has been identified as a management contract or compensatory plan or arrangement.
|
**
|
Pursuant to the Commission’s Orders Granting Confidential Treatment under Rule 406 of the Securities Act of 1933 or Rule 24(b)-2 under the Securities Exchange Act of 1934, certain confidential portions of this Exhibit were omitted by means of redacting a portion of the text.
|
Company:
|
Sirius XM Holdings Inc.
1221 Avenue of the Americas 36 th Floor New York, New York 10020 Attention: General Counsel |
Employee:
|
Address on file at the
office of Sirius XM |
1.
|
I have reviewed this Annual Report on Form 10-K for the fiscal year ended
December 31, 2014
of Sirius XM Holdings Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
|
|
By:
|
/s/ J
AMES
E. M
EYER
|
|
James E. Meyer
Chief Executive Officer
(Principal Executive Officer)
|
1.
|
I have reviewed this Annual Report on Form 10-K for the fiscal year ended
December 31, 2014
of Sirius XM Holdings Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
|
|
By:
|
/s/ D
AVID
J. F
REAR
|
|
David J. Frear
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
|
By:
|
/s/ J
AMES
E. M
EYER
|
|
James E. Meyer
Chief Executive Officer
(Principal Executive Officer)
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
|
By:
|
/s/ D
AVID
J. F
REAR
|
|
David J. Frear
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
|