Sirius XM Holdings Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Assets and Liabilities Held for Sale

Assets and Liabilities Held for Sale

6 Months Ended

Jun. 30, 2017

Discontinued Operations and Disposal Groups [Abstract]

Ticketfly

In June 2017, we entered into an agreement to sell Ticketfly, our ticketing service segment, to Eventbrite, Inc. ("Eventbrite") for an estimated purchase price of $184.5 million, which includes an aggregate purchase price of $200.0 million, less estimated purchase price adjustments of $10.9 million for certain indemnification provisions and costs to sell of $4.6 million. The $200.0 million aggregate purchase price consists of $150.0 million in cash and $50.0 million in the form of a convertible subordinated promissory note (the "Note"), which are payable and issuable at the closing of the transaction. We expect the sale to be completed in the three months ending September 30, 2017. The purchase price is subject to customary adjustments for working capital and certain indemnification provisions. The Note will be due five years from its issuance date (the "Maturity Date") and will accrue interest at a rate of 6.5% per annum, payable quarterly in cash or stock for the first year, and in cash thereafter. Prior to the Maturity Date, the Note is convertible at the Company’s option into shares of Eventbrite’s common stock.

As a result of the agreement, we met the requirements to classify the assets and liabilities of Ticketfly as held for sale in the three months ended June 30, 2017. During the three and six months ended June 30, 2017, we recognized goodwill impairment of $131.7 million for the Ticketfly assets held for sale, which was based on the fair value of these net assets as implied by the estimated purchase price of $184.5 million. We consider the fair value of the net assets to be classified as Level 2 within the fair value hierarchy because Ticketfly is not a publicly traded company. Instead, the fair value was based on other observable inputs, such as the selling price, which represents an exit price.

The revenues and expenses of Ticketfly are included in our condensed consolidated statements of operations for the three and six months ended June 30, 2016 and 2017. The following table provides Ticketfly's loss before provision for income taxes for the three and six months ended June 30, 2016 and 2017:



	Three months ended June 30,				Six months ended June 30,
	2016		2017		2016		2017
	(in thousands)
Loss before benefit from (provision for) income taxes	$	8,230	$	141,041	$	15,851	$	151,245

KXMZ

In June 2017, we entered into a purchase agreement to sell KXMZ, an FM radio station based in Rapid City, South Dakota. As a result of the purchase agreement, we met the requirements to classify the assets and liabilities of KXMZ as held for sale in the three months ended June 30, 2017. This did not result in a material impact to our condensed consolidated financial statements.

Assets and Liabilities Held for Sale

The following table provides the carrying amounts of the major classes of assets and liabilities of Ticketfly and KXMZ included in held for sale in our Condensed Consolidated Balance Sheet as of June 30, 2017.



	As of June 30, 2017
Assets held for sale
Cash and cash equivalents	$	25,583
Accounts receivable, net	5,625
Prepaid expenses and other current assets	10,293
Property and equipment, net	5,096
Goodwill	103,474
Intangible assets, net	57,932
Other long-term assets	19,841
Total assets held for sale	$	227,844
Liabilities held for sale
Accounts payable, accrued liabilities and accrued compensation	$	5,637
Other current liabilities	28,758
Other long-term liabilities	8,664
Total liabilities held for sale	$	43,059

The above assets and liabilities held for sale have been classified as current due to our expectation that the sales will be completed within one year of June 30, 2017. Given that the sales of Ticketfly and KXMZ do not represent a strategic shift in our business, we have not classified the operations of these business as discontinued operations in our Condensed Consolidated Statements of Operations.