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Stockholders' Equity
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6 Months Ended |
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Jun. 30, 2011
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| Stockholders' Equity [Abstract] | |
| Stockholders' Equity |
(12) Stockholders’ Equity
Common Stock, par value $0.001 per share
We were authorized to issue up to 9,000,000,000 shares of common stock as of June 30, 2011 and
December 31, 2010. There were 3,948,913,078 and 3,933,195,112 shares of common stock issued and
outstanding as of June 30, 2011 and December 31, 2010, respectively.
As of June 30, 2011, approximately 3,287,210,000 shares of common stock were reserved for
issuance in connection with outstanding convertible debt, preferred stock, warrants, incentive
stock awards and common stock to be granted to third parties upon satisfaction of performance
targets.
To facilitate the offering of the Exchangeable Notes, we entered into share lending agreements
with Morgan Stanley Capital Services Inc. (“MS”) and UBS AG London Branch (“UBS”) in July 2008,
under which we loaned MS and UBS an aggregate of 262,400,000 shares of our common stock in exchange
for a fee of $0.001 per share. The obligations of MS to us under its share lending agreement are
guaranteed by its parent company, Morgan Stanley. During the third quarter of 2009, MS returned to
us 60,000,000 shares of our common stock borrowed in July 2008, which were retired upon receipt. As
of June 30, 2011, there were 202,400,000 shares loaned under the facilities.
Under each share lending agreement, the share loan will terminate in whole or in part, as the
case may be, and the relevant borrowed shares must be returned to us upon the earliest of the
following: (i) the share borrower terminates all or a portion of the loan between it and us,
(ii) we notify the share borrower that some of the Exchangeable Notes as to which borrowed shares
relate have been exchanged, repaid or repurchased or are otherwise no longer outstanding, (iii) the
maturity date of the Exchangeable Notes, December 1, 2014, (iv) the date as of which the entire
principal amount of the Exchangeable Notes ceases to be outstanding as a result of exchange,
repayment, repurchase or otherwise or (v) the termination of the share lending agreement by the
share borrower or by us upon default by the other party, including the bankruptcy of us or the
share borrower or, in the case of the MS share lending agreement, the guarantor. A share borrower
may delay the return of borrowed shares for up to 30 business days (or under certain circumstances,
up to 60 business days) if such share borrower is legally prevented from returning the borrowed
shares to us, in which case the share borrower may, under certain circumstances, choose to pay us
the value of the borrowed shares in cash instead of returning the borrowed shares. Once borrowed
shares are returned to us, they may not be re-borrowed under the share lending agreements. There
were no requirements for the share borrowers to provide collateral.
The shares we loaned to the share borrowers are issued and outstanding for corporate law
purposes, and holders of borrowed shares (other than the share borrowers) have the same rights
under those shares as holders of any of our other outstanding common shares. Under GAAP, the
borrowed shares are not considered outstanding for the purpose of computing and reporting our net
income (loss) per common share. The accounting method may change if, due to a default by either UBS
or MS (or Morgan Stanley, as guarantor), the borrowed shares, or the equivalent value of those
shares, will not be returned to us as required under the share lending agreements.
We recorded interest expense related to the amortization of the costs associated with the
share-lending arrangement and other issuance costs of $2,760 and $2,491, respectively, for the
three months ended June 30, 2011 and 2010 and $5,450 and $4,918, respectively, for the six months
ended June 30, 2011 and 2010. As of June 30, 2011, the unamortized balance of the debt issuance
costs was $45,793, with $44,877 recorded in deferred financing fees, net, and $916 recorded in
long-term related party assets. As of December 31, 2010, the unamortized balance of the debt
issuance costs was $51,243, with $50,218 recorded in deferred financing fees, net, and $1,025
recorded in long-term related party assets. As of June 30, 2011 and December 31, 2010, the
estimated fair value of the remaining 202,400,000 loaned shares was approximately $443,256 and
$329,912, respectively.
In January 2004, SIRIUS signed a seven-year agreement with a sports programming provider which
expired in February 2011. Upon execution of this agreement, SIRIUS delivered 15,173,070 shares of
common stock valued at $40,967 to that programming provider. These shares of common stock were
subject to transfer restrictions which lapsed over time. We recognized share-based payment expense
associated with these shares of $0 and $219 in the three months ended June 30, 2011 and 2010,
respectively, and $1,568 and $1,860 in the six months ended June 30, 2011 and 2010, respectively.
As of June 30, 2011 and December 31, 2010, there was $0 and $1,568 remaining balance of common
stock value included in other current assets, respectively.
Preferred Stock, par value $0.001 per share
We were authorized to issue up to 50,000,000 shares of undesignated preferred stock as of June
30, 2011 and December 31, 2010.
There were no shares of Series A Convertible Preferred Stock (“Series A Preferred Stock”)
issued and outstanding as of June 30, 2011 and December 31, 2010.
There were 12,500,000 shares of Series B Preferred Stock issued and outstanding as of June 30,
2011 and December 31, 2010. The Series B Preferred Stock is convertible into shares of our common
stock at the rate of 206.9581409 shares of common stock for each share of Series B Preferred Stock,
representing approximately 40% of our outstanding shares of common stock (after giving effect to
such conversion). As the holder of the Series B Preferred Stock, Liberty Radio LLC is entitled to a
number of votes equal to the number of shares of our common stock into which such shares of Series
B Preferred Stock are convertible. Liberty Radio LLC will also receive dividends and distributions
ratably with our common stock, on an as-converted basis. With respect to dividend rights, the
Series B Preferred Stock ranks evenly with our common stock and each other class or series of our
equity securities not expressly provided as ranking senior to the Series B Preferred Stock. With
respect to liquidation rights, the Series B Preferred Stock ranks evenly with each other class or
series of our equity securities not expressly provided as ranking senior to the Series B Preferred
Stock, and will rank senior to our common stock.
There were no shares of Preferred Stock, Series C Junior (the “Series C Junior Preferred
Stock”), issued and outstanding as of June 30, 2011 and December 31, 2010. In 2009, our board of
directors created and reserved for issuance in accordance with the Rights Plan (as described below)
9,000 shares of the Series C Junior Preferred Stock. The shares of Series C Junior Preferred Stock
are not redeemable and rank, with respect to the payment of dividends and the distribution of
assets, junior to all other series of our preferred stock, unless the terms of such series shall so
provide. The Rights Plan expired on August 1, 2011.
Warrants
We have issued warrants to purchase shares of common stock in connection with distribution and
programming agreements, satellite purchase agreements and certain debt issuances. As of June 30,
2011, approximately 24,346,000 warrants to acquire an equal number of shares of common stock with
an average exercise price of $2.96 per share were outstanding and fully vested as of December 31,
2009 and expire at various times through 2015. For the three and six months ended June 30, 2011,
525,000 and 1,575,000 of warrants expired, respectively.
In February 2011, Daimler AG exercised 16,500,000 warrants to purchase shares of common stock
on a net settlement basis, resulting in the issuance of 7,122,951 shares of our common stock.
Rights Plan
In April 2009, our board of directors adopted a rights plan. The terms of the rights and the
rights plan are set forth in a Rights Agreement dated as of April 29, 2009 (the “Rights Plan”). The
Rights Plan was intended to act as a deterrent to any person or group acquiring 4.9% or more of our
outstanding common stock (assuming for purposes of this calculation that all of our outstanding
convertible preferred stock is converted into common stock) without the approval of our board of
directors. The Rights Plan expired on August 1, 2011.
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