Quarterly report pursuant to Section 13 or 15(d)

Commitments and Contingencies

v2.4.0.6
Commitments and Contingencies
 3 Months Ended
Mar. 31, 2012
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies
Commitments and Contingencies

The following table summarizes our expected contractual cash commitments as of March 31, 2012:
 
2012
 
2013
 
2014
 
2015
 
2016
 
Thereafter
 
Total
Long-term debt obligations
$
1,191

 
$
745,382

 
$
550,182

 
$
1,024,428

 
$
—

 
$
700,000

 
$
3,021,183

Cash interest payments
221,328

 
280,579

 
183,759

 
110,257

 
53,375

 
106,750

 
956,048

Satellite and transmission
5,624

 
57,257

 
13,311

 
13,157

 
3,597

 
18,693

 
111,639

Programming and content
135,602

 
191,616

 
163,131

 
156,244

 
13,388

 
1,125

 
661,106

Marketing and distribution
35,957

 
22,692

 
17,450

 
12,129

 
8,685

 
3,192

 
100,105

Satellite incentive payments
7,758

 
11,864

 
12,607

 
11,728

 
12,604

 
78,591

 
135,152

Operating lease obligations
26,501

 
32,333

 
27,005

 
29,378

 
19,033

 
195,416

 
329,666

Other
23,268

 
14,283

 
2,712

 
419

 
182

 
—

 
40,864

Total(1)
$
457,229

 
$
1,356,006

 
$
970,157

 
$
1,357,740

 
$
110,864

 
$
1,103,767

 
$
5,355,763


(1)
The table does not include our reserve for uncertain tax positions, which at March 31, 2012 totaled $1,537, as the specific timing of any cash payments cannot be projected with reasonable certainty.

Long-term debt obligations.    Long-term debt obligations include principal payments on outstanding debt and capital lease obligations. The chart above does not give effect to the purchase of $62,729 of our 13% Notes in April 2012. Refer to Note 17.

Cash interest payments.    Cash interest payments include interest due on outstanding debt and capital lease payments through maturity. The chart above does not give effect to the purchase of $62,729 of our 13% Notes in April 2012. Refer to Note 17.

Satellite and transmission.    We have entered into agreements with third parties to operate and maintain the off-site satellite telemetry, tracking and control facilities and certain components of our terrestrial repeater networks. We have also entered into various agreements to design and construct a satellite and related launch vehicle for use in our systems.

Programming and content.    We have entered into various programming agreements. Under the terms of these agreements, our obligations include fixed payments, advertising commitments and revenue sharing arrangements.

Marketing and distribution.    We have entered into various marketing, sponsorship and distribution agreements to promote our brand and are obligated to make payments to sponsors, retailers, automakers and radio manufacturers under these agreements. Certain programming and content agreements also require us to purchase advertising on properties owned or controlled by the licensors. We also reimburse automakers for certain engineering and development costs associated with the incorporation of satellite radios into vehicles they manufacture. In addition, in the event certain new products are not shipped by a distributor to its customers within 90 days of the distributor’s receipt of goods, we have agreed to purchase and take title to the product.
 
Satellite incentive payments.    Boeing Satellite Systems International, Inc., the manufacturer of four of XM’s in-orbit satellites, may be entitled to future in-orbit performance payments with respect to two of XM’s satellites. As of March 31, 2012, we have accrued $27,812 related to contingent in-orbit performance payments for XM-3 and XM-4 based on expected operating performance over their fifteen year design life. Boeing may also be entitled to an additional $10,000 if XM-4 continues to operate above baseline specifications during the five years beyond the satellite’s fifteen-year design life.

Space Systems/Loral, may be entitled to future in-orbit performance payments. As of March 31, 2012, we have accrued $10,216 and $21,450 related to contingent performance payments for FM-5 and XM-5, respectively, based on expected operating performance over their fifteen-year design life.

Operating lease obligations.    We have entered into cancelable and non-cancelable operating leases for office space, equipment and terrestrial repeaters. These leases provide for minimum lease payments, additional operating expense charges, leasehold improvements and rent escalations that have initial terms ranging from one to fifteen years, and certain leases that have options to renew. The effect of the rent holidays and rent concessions are recognized on a straight-line basis over the lease term, including reasonably assured renewal periods.

Other.    We have entered into various agreements with third parties for general operating purposes. In addition to the minimum contractual cash commitments described above, we have entered into agreements with other variable cost arrangements. These future costs are dependent upon many factors, including subscriber growth, and are difficult to anticipate; however, these costs may be substantial. We may enter into additional programming, distribution, marketing and other agreements that contain similar variable cost provisions.

We do not have any other significant off-balance sheet financing arrangements that are reasonably likely to have a material effect on our financial condition, results of operations, liquidity, capital expenditures or capital resources.

Legal Proceedings

In the ordinary course of business, we are a defendant in various lawsuits and arbitration proceedings, including derivative actions; actions filed by subscribers, both on behalf of themselves and on a class action basis, and actions filed by former employees, parties to contracts or leases, and owners of patents, trademarks, copyrights or other intellectual property. Our significant legal proceedings are discussed under Item I, Legal Proceedings, in Part II, Other Information.