Annual report pursuant to Section 13 and 15(d)

Property and Equipment

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Property and Equipment
 12 Months Ended
Dec. 31, 2021
Property, Plant and Equipment [Abstract]  
Property and Equipment Property and Equipment
Property and equipment, including satellites, are stated at cost, less accumulated depreciation. Equipment under capital leases is stated at the present value of minimum lease payments. Depreciation is calculated using the straight-line method over the following estimated useful life of the asset:
Satellite system 15 years
Terrestrial repeater network 5 - 15 years
Broadcast studio equipment 3 - 15 years
Capitalized software and hardware 2 - 7 years
Satellite telemetry, tracking and control facilities 3 - 15 years
Furniture, fixtures, equipment and other 2 - 7 years
Building 20 or 30 years
Leasehold improvements Lesser of useful life or remaining lease term
We review long-lived assets, such as property and equipment, for impairment whenever events or changes in circumstances indicate the carrying amount may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds the estimated future cash flows, an impairment charge is recognized in an amount by which the carrying amount exceeds the fair value of the asset. During the year ended December 31, 2021, we recorded an impairment charge of $220 related to our SXM-7 satellite which was offset by insurance recoveries. Refer to the discussion below for more information. We did not record any impairments during the years ended December 31, 2020 and 2019.
Property and equipment, net, consists of the following:
  December 31, 2021 December 31, 2020
Satellite system $ 1,841  $ 1,587 
Terrestrial repeater network 116  105 
Leasehold improvements 109  111 
Broadcast studio equipment 119  100 
Capitalized software and hardware 1,591  1,372 
Satellite telemetry, tracking and control facilities 67  96 
Furniture, fixtures, equipment and other 92  92 
Land 38  38 
Building 81  63 
Construction in progress 156  510 
Total property and equipment 4,210  4,074 
Accumulated depreciation (2,760) (2,445)
Property and equipment, net $ 1,450  $ 1,629 
Construction in progress consists of the following:
  December 31, 2021 December 31, 2020
Satellite system $ 64  $ 429 
Terrestrial repeater network 1  8 
Capitalized software and hardware 78  52 
Other 13  21 
Construction in progress $ 156  $ 510 
Depreciation and amortization expense on property and equipment was $379, $354, and $327 for the years ended December 31, 2021, 2020 and 2019, respectively.  We retired property and equipment of $65 during the year ended December 31, 2021.  Property and equipment of $94, which included a loss of $13 related to the termination of the Automatic service, was retired during the year ended December 31, 2020. We retired property and equipment of $9 during the year ended December 31, 2019.
We capitalize a portion of the interest on funds borrowed to finance the construction and launch of our satellites. Capitalized interest is recorded as part of the asset’s cost and depreciated over the satellite’s useful life. Capitalized interest costs were $7, $19, and $17 for the years ended December 31, 2021, 2020 and 2019, respectively, which related to the construction of our SXM-7 and SXM-8 satellites. We also capitalize a portion of share-based compensation related to employee time for capitalized software projects. Capitalized share-based compensation costs were $13, $17 and $13 for the years ended December 31, 2021, 2020 and 2019, respectively.
Satellites
As of December 31, 2021, we operated a fleet of six satellites.  Each satellite requires an FCC license, and prior to the expiration of each license, we are required to apply for a renewal of the FCC satellite license.  The renewal and extension of our licenses is reasonably certain at minimal cost, which is expensed as incurred. The chart below provides certain information on our satellites as of December 31, 2021:
Satellite Description Year Delivered Estimated End of
Depreciable Life		 FCC License Expiration Year
SIRIUS FM-5 2009 2024 2025
SIRIUS FM-6 2013 2028 2022
XM-3 2005 2020 2026
XM-4 2006 2021 2022
XM-5 2010 2025 2026
SXM-8 2021 2036 2029
On December 13, 2020, our SXM-7 satellite was launched and in-orbit testing of SXM-7 began on January 4, 2021. During in-orbit testing of SXM-7, events occurred which caused failures of certain SXM-7 payload units. The evaluation of SXM-7 concluded that the satellite will not function as intended, which we considered to be a triggering event prompting the assessment as to whether the asset's carrying value of $220 was recoverable. In determining recoverability of SXM-7, we compared the asset's carrying value to the undiscounted cash flows derived from the satellite. SXM-7 was determined to be a total loss and therefore, we determined that the carrying value of the satellite was not recoverable and an impairment charge of $220 was recorded to Impairment, restructuring and acquisition costs in our consolidated statements of comprehensive income for the year ended December 31, 2021. SXM-7 remains in-orbit at its assigned orbital location, but is not being used to provide satellite radio service.
We procured insurance for SXM-7 to cover the risks associated with the satellite's launch and first year of in-orbit operation. The aggregate coverage under the insurance policies with respect to SXM-7 was $225. During the year ended December 31, 2021, we collected $225 of insurance recoveries. Of this amount, $220 has been recorded as a reduction to Impairment, restructuring and acquisition costs during the year ended December 31, 2021. The remaining $5 has been recorded in Other income during the year ended December 31, 2021.
Our SXM-8 satellite was successfully launched into a geostationary orbit on June 6, 2021 and was placed into service on September 8, 2021 following the completion of in-orbit testing. The SXM-8 satellite replaced the XM-3 satellite, which remains available as an in-orbit spare along with XM-5.