Annual report pursuant to Section 13 and 15(d)

Property and Equipment

v3.20.4
Property and Equipment
 12 Months Ended
Dec. 31, 2020
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. We did not record any impairments during the years ended December 31, 2020, 2019 and 2018.
Property and equipment, net, consists of the following:
  December 31, 2020 December 31, 2019
Satellite system $ 1,587  $ 1,587 
Terrestrial repeater network 105  100 
Leasehold improvements 111  105 
Broadcast studio equipment 100  137 
Capitalized software and hardware 1,372  1,086 
Satellite telemetry, tracking and control facilities 96  87 
Furniture, fixtures, equipment and other 92  89 
Land 38  38 
Building 63  63 
Construction in progress 510  505 
Total property and equipment 4,074  3,797 
Accumulated depreciation and amortization (2,445) (2,171)
Property and equipment, net $ 1,629  $ 1,626 
Construction in progress consists of the following:
  December 31, 2020 December 31, 2019
Satellite system $ 429  $ 371 
Terrestrial repeater network 8  7 
Capitalized software and hardware 52  107 
Other 21  20 
Construction in progress $ 510  $ 505 
Depreciation and amortization expense on property and equipment was $354, $327 and $278 for the years ended December 31, 2020, 2019 and 2018, respectively.  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 and $35 during the years ended December 31, 2019 and 2018.
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 $19, $17 and $12 for the years ended December 31, 2020, 2019 and 2018, 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 $17 and $13 for the years ended December 31, 2020 and 2019, respectively. We did not capitalize any share-based compensation for the year ended December 31, 2018.
Satellites
As of December 31, 2020, we operate 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, 2020:
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 2021
XM-4 2006 2021 2022
XM-5 2010 2025 2026
We have entered into agreements for the design construction and launch of two satellites, SXM-7 and SXM-8. On December 13, 2020, SXM-7 was successfully launched. In-orbit testing of SXM-7 began on January 4, 2021. During in-orbit testing of SXM-7, events occurred which have caused failures of certain SXM-7 payload units. An evaluation of SXM-7 is underway. The full extent of the damage to SXM-7 is not yet known. As of December 31, 2020, we had $220 capitalized in construction in progress related to SXM-7.