Annual report pursuant to Section 13 and 15(d)

Property and Equipment

v3.24.0.1
Property and Equipment
 12 Months Ended
Dec. 31, 2023
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 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, 2023, we retired property and equipment of $289, and recorded related impairment charges of $14 primarily related to terminated software projects. During the year ended December 31, 2022, we recorded impairment charges of $48 related to the write off of terminated software projects and fixed assets in connection with furniture and equipment located at impaired office spaces. Refer to the Note 5 for more information. 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.
Property and equipment, net, consists of the following:
  December 31, 2023 December 31, 2022
Satellite system $ 1,598  $ 1,841 
Terrestrial repeater network 117  118 
Leasehold improvements 106  100 
Broadcast studio equipment 146  133 
Capitalized software and hardware 2,178  1,821 
Satellite telemetry, tracking and control facilities 84  76 
Furniture, fixtures, equipment and other 110  89 
Land 32  32 
Building 74  70 
Construction in progress 538  313 
Total property and equipment 4,983  4,593 
Accumulated depreciation (3,229) (3,094)
Property and equipment, net $ 1,754  $ 1,499 
Construction in progress consists of the following:
  December 31, 2023 December 31, 2022
Satellite system $ 490  $ 212 
Terrestrial repeater network 7  10 
Capitalized software and hardware 17  56 
Other 24  35 
Construction in progress $ 538  $ 313 
Depreciation and amortization expense on property and equipment was $410, $380 and $379 for the years ended December 31, 2023, 2022 and 2021, respectively. In addition to the property and equipment impaired above, we sold real estate during the year ended December 31, 2022 for net proceeds of $15 resulting in a gain of $8 which has been recorded to Impairment, restructuring and acquisition costs in our consolidated statements of comprehensive income.
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 $16, $5 and $7 for the years ended December 31, 2023, 2022, and 2021, respectively, which related to the construction of our SXM-9, SXM-10, SXM-11 and SXM-12 satellites. We also capitalize a portion of share-based compensation related to employee time for capitalized software projects. Capitalized share-based compensation costs were $18, $16 and $13 for the years ended December 31, 2023, 2022 and 2021, respectively.
Satellites
As of December 31, 2023, we operated a fleet of five 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, 2023:
Satellite Description Year Delivered Estimated End of
Depreciable Life		 FCC License Expiration Year
SIRIUS FM-5 2009 2024 2025
SIRIUS FM-6 2013 2028 2030
XM-3 2005 2020 2026
XM-5 2010 2025 2026
SXM-8 2021 2036 2029
During the year ended December 30, 2021, we recorded an impairment charge of $220 to Impairment, restructuring and acquisition costs in our consolidated statements of comprehensive income related to the total loss of our 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 year ended December 30, 2021, we collected $225 of insurance recoveries. Of this amount, $220 was recorded as a reduction to Impairment, restructuring and acquisition costs during year ended December 30, 2021. The remaining $5 was recorded in Other income during the year ended December 30, 2021. SXM-7 remains in-orbit at its assigned orbital location, but is not being used to provide satellite radio service.
During 2023, we removed our XM-4 satellite from service and in October 2023 we completed the de-orbiting and decommissioning of the satellite. Our XM-3 satellite remains available as an in-orbit spare.