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

Quarterly report pursuant to Section 13 or 15(d)

Goodwill and Intangible Assets

Goodwill and Intangible Assets

9 Months Ended

Sep. 30, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

Acquisitions

In July 2015, we completed the acquisition of Next Big Sound, Inc. ("NBS"). Goodwill generated from the business acquisition is primarily attributable to expected synergies from future growth and from the potential to expand our Artist Marketing Platform ("AMP") and is not deductible for tax purposes. We have accounted for this acquisition as a business combination in the three months ended September 30, 2015. NBS provides analytics for online music, including analyzing the popularity of musicians in social networks, streaming services and radio.

In June 2013, we entered into an agreement to purchase the assets of KXMZ-FM. The Federal Communications Commission ("FCC") approved the transfer of the FCC licenses and the acquisition was completed in June 2015. We have accounted for this acquisition as a business combination in the nine months ended September 30, 2015.

These acquisitions were not material to our condensed consolidated financial statements, either individually or in the aggregate. Accordingly, pro forma historical results of operations related to these business acquisitions during the three and nine months ended September 30, 2015 have not been presented. We have included the financial results of these business acquisitions in our condensed consolidated financial statements from their respective dates of acquisition.

The changes in the carrying amount of goodwill for the nine months ended September 30, 2015, are as follows:



	Goodwill
	(in thousands)
Balance as of December 31, 2014	$	—
Goodwill resulting from business combinations	23,052
Balance as of September 30, 2015	$	23,052

The following summarizes information regarding the gross carrying amounts and accumulated amortization of intangibles.



		As of December 31, 2014							As of September 30, 2015
	Useful Lives From Date of Acquisition (in years)	Gross Carrying Amount		Accumulated Amortization			Net Carrying Value		Gross Carrying Amount		Accumulated Amortization			Net Carrying Value
		(in thousands)							(in thousands)
Finite-lived intangible assets
Patents	5.5 - 11	$	8,030	$	(1,091	)	$	6,939	$	8,030	$	(1,640	)	$	6,390
Developed technology	4	—		—			—		1,550		(97		)	1,453
Customer relationships	2	—		—			—		940		(118		)	822
Trade names	2	—		—			—		320		(40		)	280
Total finite-lived intangible assets		$	8,030	$	(1,091	)	$	6,939	$	10,840	$	(1,895	)	$	8,945

Indefinite-lived intangible assets
FCC license - Broadcast Radio		$	—	$	—		$	—	$	193	$	—		$	193

Total intangible assets		$	8,030	$	(1,091	)	$	6,939	$	11,033	$	(1,895	)	$	9,138

Amortization expense of intangible assets was $0.2 million and $0.4 million for the three months ended September 30, 2014 and 2015, and $0.5 million and $0.8 million for the nine months ended September 30, 2014 and 2015, respectively.

The following is a schedule of future amortization expense related to finite-lived intangible assets as of September 30, 2015.



	As of September 30, 2015
	(in thousands)
Three months ending December 31, 2015	$	439
2016	1,750
2017	1,435
2018	1,120
2019	926
Thereafter	3,275
Total future amortization expense	$	8,945

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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