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Acquisition | 6 Months Ended
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Jun. 30, 2019
Business Combinations [Abstract] |
Acquisition | Acquisition On February 1, 2019, through a series of transactions, Pandora Media, Inc., became an indirect wholly owned subsidiary of Sirius XM and continues to operate as Pandora Media, LLC (the “Pandora Acquisition”). In connection with the Pandora Acquisition, we purchased all of the outstanding shares of the capital stock of Pandora for $2,355 by converting each outstanding share of Pandora common stock into 1.44 shares of our common stock and we also canceled our preferred stock investment in Pandora for $524 for total consideration of $2,879. Net cash acquired was $313. As part of the Pandora Acquisition, Holdings unconditionally guaranteed all of the payment obligations of Pandora under its outstanding 1.75% convertible senior notes due 2020 and 1.75% convertible senior notes due 2023. The table below shows the value of the consideration paid in connection with the Pandora Acquisition:
| Total
Pandora common stock outstanding | 272 |
Exchange ratio | 1.44 |
Common stock issued | 392 |
Price per share of Holdings common stock | $ | 5.83 |
Value of common stock issued to Pandora stockholders | $ | 2,285 |
Value of replacement equity awards attributable to pre-combination service | $ | 70 |
Consideration of common stock and replacement equity awards for pre-combination service | $ | 2,355 |
Sirius XM’s Pandora preferred stock investment (related party fair value instrument) canceled | $ | 524 |
Total consideration for transactions | $ | 2,879 |
Value attributed to par at $0.001 par value | $ | 1 |
Balance to capital in excess of par value | $ | 2,354 |
The table below summarizes the fair value of the assets acquired and liabilities assumed as of the acquisition date:
Acquired Assets: |
Cash and cash equivalents | $ | 313 |
Receivables, net | 353 |
Prepaid expenses and other current assets | 109 |
Property and equipment | 65 |
Intangible assets | 1,107 |
Goodwill | 1,562 |
Deferred tax assets | 75 |
Operating lease right-of-use assets | 96 |
Long term assets | 7 |
Total assets | $ | 3,687 |
Assumed Liabilities: |
Accounts payable and accrued expenses | $ | 306 |
Deferred revenue | 37 |
Operating lease current liabilities | 27 |
Current maturities of debt | 151 |
Long-term debt (a) | 218 |
Operating lease liabilities | 62 |
Other long-term liabilities | 7 |
Total liabilities | $ | 808 |
Total consideration | $ | 2,879 |
(a) | In order to present the assets acquired and liabilities assumed, the conversion feature associated with the convertible notes for $62 has been included within Long-term debt in the table above and included within Additional paid-in-capital within our unaudited statement of stockholders' equity (deficit). Refer to Note 12 for additional information.
The Pandora Acquisition was accounted for using the acquisition method of accounting. The initial purchase price allocation is preliminary and is subject to revision as permitted by ASC 805, Business Combinations. The primary areas of the purchase price allocation that are not yet finalized are related to certain current assets, contingencies and tax balances. The excess purchase price over identifiable net tangible and intangible assets of $1,562 has been recorded to Goodwill in our unaudited consolidated balance sheets as of June 30, 2019. A total of $776 has been allocated to identifiable intangible assets subject to amortization and relates to the assessed fair value of the acquired customer relationships and software and technology and is being amortized over the estimated weighted average useful lives of 8 and 5 years, respectively. A total of $331 has been allocated to identifiable indefinite lived intangible assets and relates to the assessed fair value of the acquired trademarks. The fair value assessed for the majority of the remaining assets acquired and liabilities assumed equaled their carrying value. Goodwill represents synergies and economies of scale expected from the combination of services. Goodwill has been allocated to the Pandora segment. Additionally, in connection with the Pandora Acquisition, we acquired gross net operating loss (“NOL”) carryforwards of approximately $1,199 for federal income tax purposes available to offset future taxable income. The acquired NOL's are limited by Section 382 of the Internal Revenue Code. Those limitations are not expected to impact our ability to fully utilize those NOL's within the carryforward period. We recognized acquisition related costs of $7 and $83 that were expensed in Acquisition and other related costs in our unaudited consolidated statements of comprehensive income during the three and six months ended June 30, 2019, respectively. Pro Forma Financial Information Pandora was consolidated into our financial statements starting on the acquisition date, February 1, 2019. The aggregate revenue and net loss of Pandora consolidated into our financial statements since the date of acquisition was $441 and $56, respectively, for the three months ended June 30, 2019 and $692 and $178 for the six months ended June 30, 2019, respectively. The following pro forma financial information presents our results as if the Pandora Acquisition had occurred on January 1, 2018:
| For the Three Months Ended June 30, |  | For the Six Months Ended June 30,
| 2019 |  | 2018 |  | 2019 |  | 2018
Total revenue | $ | 1,979 |  |  | $ | 1,819 |  |  | $ | 3,839 |  |  | $ | 3,516 |
Net income | $ | 265 |  |  | $ | 143 |  |  | $ | 446 |  |  | $ | 291 |
These pro forma results are based on estimates and assumptions, which we believe are reasonable. They are not the results that would have been realized had the acquisition actually occurred on January 1, 2018 and are not indicative of our consolidated results of operations in future periods. The pro forma results primarily include adjustments related to amortization of acquired intangible assets, depreciation of property and equipment, acquisition costs and associated tax impacts (with respect to the three months ended June 30, 2019, represents the effect of purchase price accounting as Pandora’s results of operations were fully reflected for the period).

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
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