| Summary of assets and liabilities measured at fair value |
Our assets and liabilities measured at fair value were as follows:
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September 30, 2018 |
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December 31, 2017 |
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Level 1 |
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Level 2 |
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Level 3 |
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Total Fair
Value |
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Level 1 |
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Level 2 |
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Level 3 |
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Total Fair
Value |
Assets: |
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Pandora investment (a)
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— |
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$ |
554,352 |
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— |
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$ |
554,352 |
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— |
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$ |
480,472 |
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— |
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$ |
480,472 |
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Liabilities: |
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Debt (b)
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— |
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$ |
6,585,588 |
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— |
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$ |
6,585,588 |
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— |
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$ |
6,987,473 |
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— |
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$ |
6,987,473 |
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(a) |
During the year ended December 31, 2017, Sirius XM completed a $480,000 investment in Pandora. We have elected the fair value option to account for this investment. Refer to Note 10 for information on this transaction.
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(b) |
The fair value for non-publicly traded debt is based upon estimates from a market maker and brokerage firm. Refer to Note 11 for information related to the carrying value of our debt as of September 30, 2018 and December 31, 2017.
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| Schedule of new ASU adoption impact on financial statements |
The cumulative effects of the changes made to our consolidated balance sheet as of January 1, 2018 for the adoption of ASU 2014-09, ASU 2018-02 and ASU 2018-07 are included in the table below.
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Balance at
December 31, 2017 |
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Adjustments Due to ASU 2014-09 |
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Adjustments Due to ASU 2018-02 |
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Adjustments Due to ASU 2018-07 |
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Balance at
January 1, 2018 |
Balance Sheet |
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Assets |
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Prepaid expenses and other current assets |
$ |
129,669 |
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$ |
8,262 |
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$ |
— |
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$ |
— |
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$ |
137,931 |
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Other long-term assets |
118,671 |
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2,576 |
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— |
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— |
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121,247 |
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Deferred tax assets |
505,528 |
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(5,915 |
) |
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— |
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— |
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499,613 |
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Liabilities: |
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Accounts payable and accrued expenses |
794,341 |
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32,399 |
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— |
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(26,266 |
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800,474 |
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Current portion of deferred revenue |
1,881,825 |
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(41,902 |
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— |
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— |
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1,839,923 |
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Long-term deferred revenue |
174,579 |
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(3,990 |
) |
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— |
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— |
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170,589 |
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Equity: |
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Additional paid-in capital |
1,713,816 |
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— |
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— |
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30,398 |
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1,744,214 |
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Accumulated deficit |
(3,243,473 |
) |
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18,416 |
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(4,013 |
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(4,132 |
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(3,233,202 |
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AOCI, net of tax |
18,407 |
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— |
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4,013 |
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— |
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22,420 |
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The following tables illustrate the impacts of adopting ASU 2014-09 on our unaudited consolidated statement of comprehensive income.
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For the Three Months Ended September 30, 2018 |
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For the Nine Months Ended September 30, 2018 |
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As Reported |
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Impact of Adopting ASU 2014-09 |
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Balances Without Adoption of ASU 2014-09 |
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As Reported |
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Impact of Adopting ASU 2014-09 |
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Balances Without Adoption of ASU 2014-09 |
Income Statement |
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Revenues |
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Subscriber revenue |
$ |
1,162,439 |
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$ |
24,103 |
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$ |
1,186,542 |
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$ |
3,418,485 |
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$ |
72,282 |
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$ |
3,490,767 |
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Expenses |
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Revenue share and royalties |
343,015 |
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22,743 |
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365,758 |
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1,057,431 |
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67,047 |
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1,124,478 |
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Subscriber acquisition costs |
109,469 |
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902 |
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110,371 |
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351,940 |
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2,748 |
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354,688 |
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Income tax expense |
(11,525 |
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(15 |
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(11,540 |
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(162,344 |
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(371 |
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(162,715 |
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Net Income |
$ |
343,048 |
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$ |
443 |
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$ |
343,491 |
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$ |
924,841 |
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$ |
2,116 |
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$ |
926,957 |
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ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. This ASU updates the guidance related to the statement of cash flows and requires that the statement include restricted cash with cash and cash equivalents when reconciling beginning and ending cash. The guidance was effective for fiscal years beginning after December 15, 2017, including interim periods within that reporting period. We adopted this ASU effective January 1, 2018. As a result of the adoption, we have added restricted cash to the reconciliation of beginning and ending cash and cash equivalents and included a reconciliation of total cash, cash equivalents and restricted cash to the balance sheet for each period presented in the unaudited consolidated statements of cash flows.
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