Quarterly report pursuant to Section 13 or 15(d)

Property and Equipment

v3.22.2.2
Property and Equipment
 9 Months Ended
Sep. 30, 2022
Property, Plant and Equipment [Abstract]  
Property and Equipment Property and Equipment
Property and equipment, net, consists of the following:
  September 30, 2022 December 31, 2021
Satellite system $ 1,841  $ 1,841 
Terrestrial repeater network 116  116 
Leasehold improvements 101  109 
Broadcast studio equipment 126  119 
Capitalized software and hardware 1,607  1,591 
Satellite telemetry, tracking and control facilities 69  67 
Furniture, fixtures, equipment and other 89  92 
Land 38  38 
Building 82  81 
Construction in progress 382  156 
Total property and equipment 4,451  4,210 
Accumulated depreciation (3,013) (2,760)
Property and equipment, net $ 1,438  $ 1,450 
Construction in progress consists of the following:
  September 30, 2022 December 31, 2021
Satellite system $ 143  $ 64 
Terrestrial repeater network 4  1 
Capitalized software and hardware 204  78 
Other 31  13 
Construction in progress $ 382  $ 156 
Depreciation expense on property and equipment was $95 and $97 for the three months ended September 30, 2022 and 2021, respectively, and $287 and $284 for the nine months ended September 30, 2022 and 2021, respectively.  During the three and nine months ended September 30, 2022, we wrote off furniture and equipment in connection with impaired office space leases and we disposed of assets associated with software development initiatives that we are no longer pursuing. Refer to Note 4 for more detail. For the three and nine months ended September 30, 2022, we retired property and equipment of $59 and $81, respectively. We retired property and equipment of $47 and $54 during the three and nine months ended September 30, 2021, respectively.
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 $1 for each of the three months ended September 30, 2022 and 2021, respectively, and $3 and $6 for the nine months ended September 30, 2022 and 2021, respectively, which related to the construction of our satellites. We also capitalize a portion of share-based compensation related to employee time for capitalized software projects. Capitalized share-based compensation costs were $4 for each of the three months ended September 30, 2022 and 2021, and $13 and $10 for the nine months ended September 30, 2022 and 2021, respectively.
Satellites
As of September 30, 2022, 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 September 30, 2022:
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 (a)
XM-3 2005 2020 2026
XM-4 2006 2021
2022 (b)
XM-5 2010 2025 2026
SXM-8 2021 2036 2029
(a)We filed an application with the FCC to extend the license for our SIRIUS FM-6 satellite during the quarter ended September 30, 2022 and expect it to be granted routinely.
(b)We filed an application with the FCC to extend the license for our XM-4 satellite during the quarter ended December 31, 2022 and expect it to be granted routinely.
During the nine months ended September 30, 2021, we recorded an impairment charge of $220 to Impairment, restructuring and acquisition costs in our unaudited consolidated statements of comprehensive income related to the total loss of the SXM-7 satellite. 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 nine months ended September 30, 2021, we collected $225 of insurance recoveries. Of this amount, $80 and $220 were recorded as a reduction to Impairment, restructuring and acquisition costs during the three and nine months ended September 30, 2021, respectively. The remaining $5 was recorded in Other income during the three and nine months ended September 30, 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. Our SXM-8 satellite replaced our XM-3 satellite. During the nine months ended September 30, 2022, we replaced our XM-4 satellite with our XM-5 satellite. As of September 30, 2022, our XM-3 satellite remains available as an in-orbit spare.