00009089372020Q2false12/31The following table reconciles cash, cash equivalents and restricted cash per the statement of cash flows to the balance sheet. The restricted cash balances are primarily due to letters of credit which have been issued to the landlords of leased office space. The terms of the letters of credit primarily extend beyond one year.
Cash and cash equivalents : June 30, 2020: $1,770, December 31, 2019: $106, June 30, 2019: $215, December 31, 2018: $54
Restricted cash included in Other long-term assets: June 30, 2020: $11, December 31, 2019: $14, June 30, 2019: $11, December 31, 2018: $11
Total cash, cash equivalents and restricted cash at end of period: June 30, 2020: $1,781, December 31, 2019: $120, June 30, 2019: $226, December 31, 2018: $651,77010621554111411111,78112022665P30YP30Y0.08860.1520P3Ythree 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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
| | | | | | | | | | | |
| ☑ | | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2020
OR
| | | | | | | | |
| ☐ | | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR THE TRANSITION PERIOD FROM __________ TO ________
COMMISSION FILE NUMBER 001-34295
SIRIUS XM HOLDINGS INC.
(Exact name of registrant as specified in its charter)
| | | | | | | | | | | |
| Delaware | | | 38-3916511 |
(State or other jurisdiction of
incorporation or organization) | | | (I.R.S. Employer Identification No.) |
1221 Avenue of the Americas, 35th Floor, New York, NY
(Address of Principal Executive Offices)
10020
(Zip Code)
Registrant’s telephone number, including area code: (212) 584-5100
Former name, former address and former fiscal year, if changed since last report: Not Applicable
Securities registered pursuant to Section 12(b) of the Act:
| | | | | | | | | | | | | | |
| Title of each class | | Trading Symbol(s) | | Name of exchange on which registered |
| Common stock, $0.001 par value | | SIRI | | NASDAQ Global Select Market |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.:
| | | | | | | | | | | | | | | | | | | | | | | |
| Large accelerated filer | ☑ | | Accelerated filer | ☐ | | Non-accelerated filer | ☐ |
| | | | | | | |
| Smaller reporting company | ☐ | | Emerging growth company | ☐ | | | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☑
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.
| | | | | | | | | | | |
| (Class) | | (Outstanding as of July 28, 2020) | |
| Common stock, $0.001 par value | | 4,340,289,704 | shares |
SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES
INDEX TO FORM 10-Q
SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Three Months Ended June 30, | | | | For the Six Months Ended June 30, | | | | |
| (in millions, except per share data) | 2020 | | 2019 | | 2020 | | 2019 | | |
| Revenue: | | | | | | | | | |
| Subscriber revenue | $ | 1,578 | | | $ | 1,537 | | | $ | 3,163 | | | $ | 2,995 | | | |
| Advertising revenue | 236 | | | 358 | | | 521 | | | 567 | | | |
| Equipment revenue | 25 | | | 41 | | | 66 | | | 82 | | | |
| Other revenue | 35 | | | 41 | | | 76 | | | 77 | | | |
| Total revenue | 1,874 | | | 1,977 | | | 3,826 | | | 3,721 | | | |
| Operating expenses: | | | | | | | | | |
| Cost of services: | | | | | | | | | |
| Revenue share and royalties | 587 | | | 600 | | | 1,157 | | | 1,092 | | | |
| Programming and content | 110 | | | 116 | | | 228 | | | 222 | | | |
| Customer service and billing | 122 | | | 120 | | | 240 | | | 233 | | | |
| Transmission | 43 | | | 40 | | | 83 | | | 71 | | | |
| Cost of equipment | 4 | | | 6 | | | 8 | | | 12 | | | |
| Subscriber acquisition costs | 48 | | | 104 | | | 147 | | | 212 | | | |
| Sales and marketing | 217 | | | 232 | | | 442 | | | 415 | | | |
| Engineering, design and development | 61 | | | 74 | | | 132 | | | 128 | | | |
| General and administrative | 119 | | | 120 | | | 226 | | | 255 | | | |
| Depreciation and amortization | 124 | | | 119 | | | 256 | | | 226 | | | |
| Acquisition and restructuring costs | 24 | | | 7 | | | 24 | | | 83 | | | |
| Total operating expenses | 1,459 | | | 1,538 | | | 2,943 | | | 2,949 | | | |
| Income from operations | 415 | | | 439 | | | 883 | | | 772 | | | |
| Other (expense) income: | | | | | | | | | |
| Interest expense | (102) | | | (97) | | | (201) | | | (187) | | | |
| Loss on extinguishment of debt | — | | | — | | | — | | | (1) | | | |
| Other income (expense) | 4 | | | (3) | | | 8 | | | (2) | | | |
| Total other (expense) income | (98) | | | (100) | | | (193) | | | (190) | | | |
| Income before income taxes | 317 | | | 339 | | | 690 | | | 582 | | | |
| Income tax expense | (74) | | | (76) | | | (154) | | | (157) | | | |
| Net income | $ | 243 | | | $ | 263 | | | $ | 536 | | | $ | 425 | | | |
| Foreign currency translation adjustment, net of tax | 10 | | | 7 | | | (15) | | | 14 | | | |
| Total comprehensive income | $ | 253 | | | $ | 270 | | | $ | 521 | | | $ | 439 | | | |
| Net income per common share: | | | | | | | | | |
| Basic | $ | 0.06 | | | $ | 0.06 | | | $ | 0.12 | | | $ | 0.09 | | | |
| Diluted | $ | 0.05 | | | $ | 0.06 | | | $ | 0.12 | | | $ | 0.09 | | | |
| Weighted average common shares outstanding: | | | | | | | | | |
| Basic | 4,369 | | | 4,568 | | | 4,387 | | | 4,569 | | | |
| Diluted | 4,457 | | | 4,675 | | | 4,487 | | | 4,677 | | | |
See accompanying notes to the unaudited consolidated financial statements.
SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
| | | | | | | | | | | |
| | | |
| (in millions, except per share data) | June 30, 2020 | | December 31, 2019 |
| ASSETS | (unaudited) | | |
| Current assets: | | | |
| Cash and cash equivalents | $ | 1,770 | | | $ | 106 | |
| Receivables, net | 497 | | | 670 | |
| Inventory, net | 12 | | | 11 | |
| Related party current assets | 11 | | | 22 | |
| Prepaid expenses and other current assets | 205 | | | 194 | |
| Total current assets | 2,495 | | | 1,003 | |
| Property and equipment, net | 1,592 | | | 1,626 | |
| Intangible assets, net | 3,398 | | | 3,467 | |
| Goodwill | 3,860 | | | 3,843 | |
| Related party long-term assets | 512 | | | 452 | |
| Deferred tax assets | 41 | | | 153 | |
| Operating lease right-of-use assets | 438 | | | 466 | |
| Other long-term assets | 129 | | | 139 | |
| Total assets | $ | 12,465 | | | $ | 11,149 | |
| LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | | | |
| Current liabilities: | | | |
| Accounts payable and accrued expenses | $ | 1,022 | | | $ | 1,151 | |
| Accrued interest | 157 | | | 160 | |
| Current portion of deferred revenue | 1,833 | | | 1,930 | |
| Current maturities of debt | 1,492 | | | 2 | |
| Operating lease current liabilities | 46 | | | 46 | |
| Related party current liabilities | 2 | | | 4 | |
| Total current liabilities | 4,552 | | | 3,293 | |
| Long-term deferred revenue | 123 | | | 130 | |
| Long-term debt | 7,841 | | | 7,842 | |
| | | |
| Deferred tax liabilities | 70 | | | 70 | |
| Operating lease liabilities | 430 | | | 456 | |
| Other long-term liabilities | 117 | | | 94 | |
| Total liabilities | 13,133 | | | 11,885 | |
| Commitments and contingencies (Note 16) | | | |
| Stockholders’ equity (deficit): | | | |
Common stock, par value $0.001 per share; 9,000 shares authorized; 4,355 and 4,412 shares issued; 4,353 and 4,412 shares outstanding at June 30, 2020 and December 31, 2019, respectively | 4 | | | 4 | |
| Accumulated other comprehensive (loss) income, net of tax | (7) | | | 8 | |
| Additional paid-in capital | (49) | | | 395 | |
Treasury stock, at cost; 2 and 0 shares of common stock at June 30, 2020 and December 31, 2019, respectively | (9) | | | — | |
| Accumulated deficit | (607) | | | (1,143) | |
| Total stockholders’ equity (deficit) | (668) | | | (736) | |
| Total liabilities and stockholders’ equity (deficit) | $ | 12,465 | | | $ | 11,149 | |
See accompanying notes to the unaudited consolidated financial statements.
SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT)
(UNAUDITED)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the Six Months Ended June 30, 2020 | | | | | | | | | | | | | | | | |
| | Common Stock | | | | Accumulated
Other
Comprehensive Income (Loss) | | Additional
Paid-in
Capital | | Treasury Stock | | | | Accumulated
Deficit | | Total
Stockholders’ Equity (Deficit) |
| (in millions) | | Shares | | Amount | | | | | | Shares | | Amount | | | | |
| Balance at December 31, 2019 | | 4,412 | | | $ | 4 | | | $ | 8 | | | $ | 395 | | | — | | | $ | — | | | $ | (1,143) | | | $ | (736) | |
| Comprehensive income, net of tax | | — | | | — | | | (15) | | | — | | | — | | | — | | | 536 | | | 521 | |
| Share-based payment expense | | — | | | — | | | — | | | 115 | | | — | | | — | | | — | | | 115 | |
| Exercise of stock options and vesting of restricted stock units | | 11 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| Withholding taxes on net share settlement of stock-based compensation | | — | | | — | | | — | | | (43) | | | — | | | — | | | — | | | (43) | |
Cash dividends paid on common stock, $0.02662 per share | | — | | | — | | | — | | | (117) | | | — | | | — | | | — | | | (117) | |
| Common stock repurchased | | — | | | — | | | — | | | — | | | 70 | | | (408) | | | — | | | (408) | |
| Common stock retired | | (68) | | | — | | | — | | | (399) | | | (68) | | | 399 | | | — | | | — | |
| Balance at June 30, 2020 | | 4,355 | | | $ | 4 | | | $ | (7) | | | $ | (49) | | | 2 | | | $ | (9) | | | $ | (607) | | | $ | (668) | |
See accompanying notes to the unaudited consolidated financial statements.
SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT)
(UNAUDITED)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the Three Months Ended June 30, 2020 | | | | | | | | | | | | | | | | |
| | Common Stock | | | | Accumulated
Other
Comprehensive Income (Loss) | | Additional
Paid-in
Capital | | Treasury Stock | | | | Accumulated
Deficit | | Total
Stockholders’ Equity (Deficit) |
| (in millions) | | Shares | | Amount | | | | | | Shares | | Amount | | | | |
| Balance at March 31, 2020 | | 4,379 | | | $ | 4 | | | $ | (17) | | | $ | 116 | | | — | | | $ | — | | | $ | (850) | | | $ | (747) | |
| Comprehensive income, net of tax | | — | | | — | | | 10 | | | — | | | — | | | — | | | 243 | | | 253 | |
| Share-based payment expense | | — | | | — | | | — | | | 56 | | | — | | | — | | | — | | | 56 | |
| Exercise of stock options and vesting of restricted stock units | | 3 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| Withholding taxes on net share settlement of stock-based compensation | | — | | | — | | | — | | | (7) | | | — | | | — | | | — | | | (7) | |
Cash dividends paid on common stock, $0.01331 per share | | — | | | — | | | — | | | (58) | | | — | | | — | | | — | | | (58) | |
| Common stock repurchased | | — | | | — | | | — | | | — | | | 29 | | | (165) | | | — | | | (165) | |
| Common stock retired | | (27) | | | — | | | — | | | (156) | | | (27) | | | 156 | | | — | | | — | |
| Balance at June 30, 2020 | | 4,355 | | | $ | 4 | | | $ | (7) | | | $ | (49) | | | 2 | | | $ | (9) | | | $ | (607) | | | $ | (668) | |
See accompanying notes to the unaudited consolidated financial statements.
SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT)
(UNAUDITED)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the Six Months Ended June 30, 2019 | | | | | | | | | | | | | | | | |
| | Common Stock | | | | Accumulated
Other
Comprehensive Income (Loss) | | Additional
Paid-in
Capital | | Treasury Stock | | | | Accumulated
Deficit | | Total
Stockholders’ Equity (Deficit) |
| (in millions) | | Shares | | Amount | | | | | | Shares | | Amount | | | | |
| Balance at December 31, 2018 | | 4,346 | | | $ | 4 | | | $ | (6) | | | $ | 242 | | | — | | | $ | — | | | $ | (2,057) | | | $ | (1,817) | |
| Comprehensive income, net of tax | | — | | | — | | | 14 | | | — | | | — | | | — | | | 425 | | | 439 | |
| Share-based payment expense | | — | | | — | | | — | | | 134 | | | — | | | — | | | — | | | 134 | |
| Exercise of stock options and vesting of restricted stock units | | 13 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| Withholding taxes on net share settlement of stock-based compensation | | — | | | — | | | — | | | (47) | | | — | | | — | | | — | | | (47) | |
Cash dividends paid on common stock, $0.0242 per share | | — | | | — | | | — | | | (113) | | | — | | | — | | | — | | | (113) | |
| Issuance of common stock as part of Pandora Acquisition | | 392 | | | 1 | | | — | | | 2,354 | | | — | | | — | | | — | | | 2,355 | |
| Equity component of convertible note | | — | | | — | | | — | | | 62 | | | — | | | — | | | — | | | 62 | |
| Common stock repurchased | | — | | | — | | | — | | | — | | | 259 | | | (1,502) | | | — | | | (1,502) | |
| Common stock retired | | (254) | | | (1) | | | — | | | (1,473) | | | (254) | | | 1,474 | | | — | | | — | |
| Balance at June 30, 2019 | | 4,497 | | | $ | 4 | | | $ | 8 | | | $ | 1,159 | | | 5 | | | $ | (28) | | | $ | (1,632) | | | $ | (489) | |
See accompanying notes to the unaudited consolidated financial statements.
SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT)
(UNAUDITED)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the Three Months Ended June 30, 2019 | | | | | | | | | | | | | | | | |
| | Common Stock | | | | Accumulated
Other
Comprehensive Income (Loss) | | Additional
Paid-in
Capital | | Treasury Stock | | | | Accumulated
Deficit | | Total
Stockholders’ Equity (Deficit) |
| (in millions) | | Shares | | Amount | | | | | | Shares | | Amount | | | | |
| Balance at March 31, 2019 | | 4,650 | | | $ | 5 | | | $ | 1 | | | $ | 2,071 | | | 5 | | | $ | (28) | | | $ | (1,895) | | | $ | 154 | |
| Comprehensive income, net of tax | | — | | | — | | | 7 | | | — | | | — | | | — | | | 263 | | | 270 | |
| Share-based payment expense | | — | | | — | | | — | | | 60 | | | — | | | — | | | — | | | 60 | |
| Exercise of stock options and vesting of restricted stock units | | 5 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| Withholding taxes on net share settlement of stock-based compensation | | — | | | — | | | — | | | (13) | | | — | | | — | | | — | | | (13) | |
Cash dividends paid on common stock, $0.0121 per share | | — | | | — | | | — | | | (56) | | | — | | | — | | | — | | | (56) | |
| Equity component of convertible note | | — | | | — | | | — | | | (6) | | | — | | | — | | | — | | | (6) | |
| Common stock repurchased | | — | | | — | | | — | | | — | | | 158 | | | (898) | | | — | | | (898) | |
| Common stock retired | | (158) | | | (1) | | | — | | | (897) | | | (158) | | | 898 | | | — | | | — | |
| Balance at June 30, 2019 | | 4,497 | | | $ | 4 | | | $ | 8 | | | $ | 1,159 | | | 5 | | | $ | (28) | | | $ | (1,632) | | | $ | (489) | |
See accompanying notes to the unaudited consolidated financial statements.
SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| | | | | | | | | | | | | |
| | For the Six Months Ended June 30, | | | | |
| (in millions) | 2020 | | 2019 | | |
| Cash flows from operating activities: | | | | | |
| Net income | $ | 536 | | | $ | 425 | | | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | | |
| Depreciation and amortization | 256 | | | 226 | | | |
| Non-cash interest expense, net of amortization of premium | 10 | | | 7 | | | |
| Provision for doubtful accounts | 38 | | | 27 | | | |
| Amortization of deferred income related to equity method investment | (1) | | | (1) | | | |
| Loss on extinguishment of debt | |