SIRIUS XM HOLDINGS INC. 10-K

ITEM 9A. CONTROLS AND PROCEDURES Controls and Procedures We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosures. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. An evaluation was performed under the supervision and with the participation of our management, including Jennifer C. Witz, our Chief Executive Officer, and Thomas D. Barry, our Executive Vice President and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as that term is defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) as of December 31, 2023. Based on that evaluation, our management, including our Chief Executive Officer and our Chief Financial Officer, concluded that our disclosure controls and procedures were effective as of December 31, 2023 at the reasonable assurance level. There has been no change in our internal control over financial reporting (as that term is defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) during the year ended December 31, 2023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Management's Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act. We have performed an evaluation under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of our internal control over financial reporting. Our management used the Internal Control-Integrated Framework ( 2013 ) issued by the Committee of Sponsoring Organizations of the Treadway Commission to perform this evaluation. Based on that evaluation, our management, including our Chief Executive Officer and Chief Financial Officer, concluded that our internal control over financial reporting was effective as of December 31, 2023. 58 Table of Contents KPMG LLP, an independent registered public accounting firm, which has audited and reported on the consolidated financial statements contained in this Annual Report on Form 10-K, has issued its report on the effectiveness of our internal control over financial reporting. Audit Report of the Independent Registered Public Accounting Firm The effectiveness of our internal control over financial reporting as of December 31, 2023 has been audited by KPMG LLP, an independent registered public accounting firm, as stated in their audit report appearing on page F-4 of this Annual Report on Form 10-K. ITEM 9B. OTHER INFORMATION None. ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS None. 59 Table of Contents PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE Information about our executive officers is contained in the discussion entitled “Information About Our Executive Officers” in Part I of this Annual Report on Form 10-K. The additional information required by this Item 10 is incorporated in this report by reference to the applicable information in our definitive proxy statement for the 2024 annual meeting of stockholders set forth under the captions Stock Ownership , Governance of the Company, Item 1. Election of Directors and Item 2. Ratification of Independent Registered Public Accountants , which we expect to file with the Securities and Exchange Commission prior to May 1, 2024. Code of Ethics We have adopted a code of ethics that applies to all employees, including executive officers, and to directors. The Code of Ethics is available on the Corporate Governance page of our website at www.siriusxm.com. If we ever were to amend or waive any provision of our Code of Ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or any person performing similar functions, we intend to satisfy our disclosure obligations with respect to any such waiver or amendment by posting such information on our internet website set forth above rather than filing a Form 8-K. ITEM 11. EXECUTIVE COMPENSATION The information required by this Item 11 is incorporated in this report by reference to the applicable information in our definitive proxy statement for the 2024 annual meeting of stockholders set forth under the captions Item 1. Election of Directors and Executive Compensation , which we expect to file with the Securities and Exchange Commission prior to May 1, 2024. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS Certain information required by this Item 12 is set forth under the heading “Equity Compensation Plan Information” in Part II, Item 5, of this Annual Report on Form 10-K. The additional information required by this Item 12 is incorporated in this report by reference to the applicable information in our definitive proxy statement for the 2024 annual meeting of stockholders set forth under the caption Stock Ownership , which we expect to file with the Securities and Exchange Commission prior to May 1, 2024. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE The information required by this Item 13 is incorporated in this report by reference to the applicable information in our definitive proxy statement for the 2024 annual meeting of stockholders set forth under the captions Governance of the Company and Item 1. Election of Directors , which we expect to file with the Securities and Exchange Commission prior to May 1, 2024. ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES Our independent registered public accounting firm is KPMG LLP , New York, NY , Auditor ID: 185 . The information required by this Item 14 is incorporated in this report by reference to the applicable information in our definitive proxy statement for the 2024 annual meeting of stockholders set forth under the caption Item 2. Ratification of Independent Registered Public Accountants - Principal Accountant Fees and Services , which we expect to file with the Securities and Exchange Commission prior to May 1, 2024. 60 Table of Contents PART IV ITEM 15. EXHIBIT AND FINANCIAL STATEMENT SCHEDULES Documents filed as part of this report: (1) Financial Statements. See Index to Consolidated Financial Statements appearing on page F-1. (2) Financial Statement Schedules. See Index to Consolidated Financial Statements appearing on page F-1. (3) Exhibits. See Exhibit Index, which is incorporated herein by reference. ITEM 16. FORM 10-K SUMMARY None. 61 Table of Contents EXHIBIT INDEX Exhibit Description 2.1 Certificate of Ownership and Merger, dated as of January 12, 2011, merging XM Satellite Radio Inc. with and into Sirius XM Radio Inc. (incorporated by reference to Exhibit 3.1 to Sirius XM Radio Inc.’s Current Report on Form 8-K filed on January 12, 2011 (File No. 001-34295)). 2.2 Agreement and Plan of Merger, dated as of November 14, 2013, by and among Sirius XM Radio Inc., Sirius XM Holdings Inc. and Sirius XM Merger Sub Inc. (incorporated by reference to Exhibit 2.1 to Sirius XM Holdings Inc.’s Current Report on Form 8-K filed on November 15, 2013 (File No. 001-34295)). 2.3 Agreement and Plan of Merger and Reorganization by and among Sirius XM Holdings Inc., Pandora Media, Inc. and White Oaks Acquisition Corp., dated as of September 23, 2018 (incorporated by reference to Exhibit 2.1 to Sirius XM Holdings Inc.’s Current Report on Form 8-K filed on September 24, 2018 (File No. 001-34295)). 2.4† Agreement and Plan of Merger, dated as of December 11, 2023, by and among Sirius XM Holdings Inc., Liberty Media Corporation, Liberty Sirius XM Holdings Inc. and Radio Merger Sub, LLC (incorporated by reference to Exhibit 2.1 to Sirius XM Holdings Inc.’s Current Report on Form 8-K filed on December 13, 2023 (File No. 001-34295)). 3.1 Amended and Restated Certificate of Incorporation of Sirius XM Holdings Inc. (incorporated by reference to Exhibit 3.1 to Sirius XM Holdings Inc.’s Current Report on Form 8-K filed on November 15, 2013 (File No. 001-34295)). 3.2 Amended and Restated By-Laws of Sirius XM Holdings Inc. (incorporated by reference to Exhibit 3.2 to Sirius XM Holdings Inc.'s Current Report on Form 8-K filed on November 15, 2013 (File No. 001-34295)). 4.1 Form of certificate for shares of Sirius XM Holdings Inc.’s common stock (incorporated by reference to Exhibit 4.1 to Sirius XM Holdings Inc.'s Annual Report on Form 10-K for the year ended December 31, 2013 (File No. 001-34295)). 4.2 Indenture, dated as of July 5, 2017, among Sirius XM Radio Inc., the guarantors named therein and U.S. Bank National Association, as trustee, relating to the 5.000% Senior Notes due 2027 (incorporated by reference to Exhibit 4.2 to Sirius XM Holdings Inc.'s Current Report on Form 8-K filed on July 5, 2017 (File No. 001-34295)). 4.3 Indenture, dated as of June 7, 2019, among Sirius XM Radio Inc., the guarantors named therein and U.S. Bank National Association, as trustee, relating to the 5.500% Senior Notes due 2029 (incorporated by reference to Exhibit 4.1 to Sirius XM Holdings Inc.'s Current Report on Form 8-K filed on June 7, 2019 (File No. 001-34295)). 4.4 Indenture, dated as of June 11, 2020, relating to the 4.125% Senior Notes due 2030, among Sirius XM Radio Inc., the guarantors named therein and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.1 to Sirius XM Holdings Inc.’s Current Report on Form 8-K dated June 11, 2020 (File No. 001-34295)). 4.5 Indenture, dated as of June 21, 2021, relating to the 4.000% Senior Notes due 2028, among Sirius XM Radio Inc., the guarantors named therein and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.1 to Sirius XM Holdings Inc.’s Current Report on Form 8-K dated June 21, 2021 (File No. 001-34295)). 4.6 Indenture, dated as of August 16, 2021, relating to the 3.125% Senior Notes due 2026, among Sirius XM Radio Inc., the guarantors named therein and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.1 to Sirius XM Holdings Inc.’s Current Report on Form 8-K dated August 16, 2021 (File No. 001-34295)). 4.7 Indenture, dated as of August 16, 2021, relating to the 3.875% Senior Notes due 2031, among Sirius XM Radio Inc., the guarantors named therein and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.2 to Sirius XM Holdings Inc.’s Current Report on Form 8-K dated August 16, 2021 (File No. 001-34295)). 4.8 Investment Agreement, dated as of February 17, 2009, between Sirius XM Radio Inc. and Liberty Radio LLC (incorporated by reference to Exhibit 4.55 to Sirius XM Radio Inc.’s Annual Report on Form 10-K for the year ended December 31, 2008 (File No. 001-34295)). 4.9 Assignment and Assumption of Investment Agreement among Sirius XM Radio Inc., Sirius XM Holdings Inc. and Liberty Radio LLC, dated as of November 15, 2013 (incorporated by reference to Exhibit 4.15 to Sirius XM Holdings Inc.'s Annual Report on Form 10-K for the year ended December 31, 2013 (File No. 001-34295)). 4.10 Description of Registrant's Securities (incorporated by reference to Exhibit 4.15 to Sirius XM Holdings Inc.'s Annual Report on Form 10-K for the year ended December 31, 2019 (File No. 001-34295)). 10.1† Reorganization Agreement, dated as of December 11, 2023, by and among Sirius XM Holdings Inc., Liberty Media Corporation and Liberty Sirius XM Holdings Inc. (incorporated by reference to Exhibit 10.1 to Sirius XM Holdings Inc.’s Current Report on Form 8-K filed on December 13, 2023 (File No. 001-34295)). 62 Table of Contents Exhibit Description 10.2 Voting Agreement, dated as of December 11, 2023, by and among Sirius XM Holdings Inc., Liberty Media Corporation, Liberty Sirius XM Holdings Inc. and each of The John C. Malone 1995 Revocable Trust, The Leslie A. Malone 1995 Revocable Trust, The Malone Family Land Preservation Foundation and John C. Malone June 2003 Charitable Remainder Unitrust (incorporated by reference to Exhibit 10.2 to Sirius XM Holdings Inc.’s Current Report on Form 8-K filed on December 13, 2023 (File No. 001-34295)). 10.3 Credit Agreement, dated as of December 5, 2012, among Sirius XM Radio Inc., JPMorgan Chase Bank, N.A. as administrative agent, and the other agents and lenders party thereto (incorporated by reference to Exhibit 10.1 to Sirius XM Radio Inc.’s Current Report on Form 8-K filed on December 10, 2012 (File No. 001-34295)). 10.4 Amendment No. 1, dated as of April 22, 2014, to the Credit Agreement, dated as of December 5, 2012, among Sirius XM Radio Inc., the Lenders party thereto and JPMorgan Chase Bank, N.A. as administrative agent for the Lenders, as collateral agent for the Secured Parties and as an Issuing Bank (incorporated by reference to Exhibit 10.1 to Sirius XM Holdings Inc.’s Current Report on Form 8-K filed on April 22, 2014 (File No. 001-34295)). 10.5 Amendment No. 2, dated as of June 16, 2015, to the Credit Agreement, dated as of December 5, 2012, among Sirius XM Radio Inc., JPMorgan Chase Bank, N.A., as administrative agent, and the other agents and lenders parties thereto (incorporated by reference to Exhibit 10.1 to Sirius XM Holdings Inc.’s Current Report on Form 8-K filed on June 19, 2015 (File No. 001-34295)). 10.6 Amendment No. 3, dated as of June 29, 2018, to the Credit Agreement, dated as of December 5, 2012, among Sirius XM Radio Inc., JPMorgan Chase Bank, N.A., as administrative agent, and the other agents and lenders parties thereto (incorporated by reference to Exhibit 10.1 to Sirius XM Holdings Inc.’s Current Report on Form 8-K filed on July 3, 2018 (File No. 001-34295)). 10.7 Amendment No. 5, dated as of August 31, 2021, to the Credit Agreement, dated as of December 5, 2012, among Sirius XM Radio Inc., JPMorgan Chase Bank, N.A., as administrative agent, and the other agents and lenders parties thereto (incorporated by reference to Exhibit 10.1 to Sirius XM Holdings Inc.’s Current Report on Form 8-K filed on September 1, 2021 (File No. 001-34295)). 10.8 Amendment No. 6, dated as of April 11, 2022, to the Credit Agreement, dated as of December 5, 2012, among Sirius XM Radio Inc., JPMorgan Chase Bank, N.A., as administrative agent, and the other agents and lenders parties thereto (incorporated by reference to Exhibit 10.1 to Sirius XM Holdings Inc.’s Current Report on Form 8-K filed on April 11. 2022 (File No. 001-34295). 10.9 Amendment No. 7, dated as of March 29, 2023, to the Credit Agreement, dated as of December 5, 2012, among Sirius XM Radio Inc., JPMorgan Chase Bank, N.A., as administrative agent, and the other agents and lenders parties thereto (incorporated by reference to Exhibit 10.1 to Sirius XM Holdings Inc.’s Quarterly Report on Form 10-Q filed on April 27. 2023 (File No. 001-34295). 10.10 Amendment No. 8, dated as of December 29, 2023, to the Credit Agreement, dated as of December 5, 2012, among Sirius XM Radio Inc., JPMorgan Chase Bank, N.A., as administrative agent, and the other agents and lenders parties thereto(incorporated by reference to Exhibit 10.1 to Sirius XM Holdings Inc.’s Current Report on Form 8-K filed on January 3. 2024 (File No. 001-34295). **10.11 Technology Licensing Agreement among XM Satellite Radio Inc., XM Satellite Radio Holdings Inc., WorldSpace Management Corporation and American Mobile Satellite Corporation, dated as of January 1, 1998, amended by Amendment No. 1 to Technology Licensing Agreement (incorporated by reference to Exhibit 10.4 to Amendment No. 1 to XM Satellite Radio Holdings Inc.’s Registration Statement on Form S-1 (File No. 333-83619)). *10.12 Amended and Restated Sirius Satellite Radio 2003 Long-Term Stock Incentive Plan (incorporated by reference to Exhibit 10.10 to Sirius XM Radio Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2004 (File No. 001-34295)). *10.13 XM Satellite Radio Holdings Inc. 2007 Stock Incentive Plan (incorporated by reference to Exhibit 10.5 to XM Satellite Radio Holdings Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2007 (File No. 000-27441)). *10.14 Form of Non-Qualified Stock Option Agreement pursuant to the XM Satellite Radio Holdings Inc. 2007 Stock Incentive Plan (incorporated by reference to Exhibit 10.2 to XM Satellite Radio Holdings Inc.’s Current Report on Form 8-K filed June 1, 2007 (File No. 000-27441)). *10.15 Form of Restricted Stock Agreement pursuant to the XM Satellite Radio Holdings Inc. 2007 Stock Incentive Plan (incorporated by reference to Exhibit 10.3 to XM Satellite Radio Holdings Inc.’s Current Report on Form 8-K filed June 1, 2007 (File No. 000-27441)). *10.16 Sirius XM Radio 401(k) Savings Plan, January 1, 2009 Restatement (incorporated by reference to Exhibit 10.30 to Sirius XM Radio Inc.’s Annual Report on Form 10-K for the year ended December 31, 2009 (File No. 001-34295)). 63 Table of Contents Exhibit Description *10.17 Sirius XM Radio Inc. 2009 Long-Term Stock Incentive Plan (incorporated by reference to Exhibit 4.9 to Sirius XM Radio Inc.’s Registration Statement on Form S-8 (File No. 333-160386)). *10.18 Sirius XM Holdings Inc. 2015 Long-Term Stock Incentive Plan (incorporated by reference to Appendix A to Sirius XM Holdings Inc.’s definitive Proxy Statement on Schedule 14A filed on April 6, 2015 (File No. 001-34295)). *10.19 Form of Director Non-Qualified Stock Option Agreement pursuant to the Sirius XM Radio Inc. 2009 Long-Term Stock Incentive Plan (incorporated by reference to Exhibit 10.34 to Sirius XM Radio Inc.’s Annual Report on Form 10-K for the year ended December 31, 2011 (File No. 001-34295)). *10.20 Form of Director Non-Qualified Stock Option Agreement pursuant to the Sirius XM Holdings Inc. 2009 Long-Term Stock Incentive Plan (incorporated by reference to Exhibit 10.18 to Sirius XM Holdings Inc.’s Annual Report for the year ended December 31, 2014 (File No. 001-34295)). *10.21 Form of Non-Qualified Stock Option Agreement pursuant to the Sirius XM Radio Inc. 2009 Long-Term Stock Incentive Plan (incorporated by reference to Exhibit 10.35 to Sirius XM Radio Inc.’s Annual Report on Form 10-K for the year ended December 31, 2011 (File No. 001-34295)). *10.22 Form of Non-Qualified Stock Option Agreement pursuant to the Sirius XM Holdings Inc. 2009 Long-Term Stock Incentive Plan (incorporated by reference to Exhibit 10.20 to Sirius XM Holdings Inc.’s Annual Report filed for the year ended December 31, 2014 (File No. 001-34295)). *10.23 Form of Director Non-Qualified Stock Option Agreement pursuant to the Sirius XM Holdings Inc. 2015 Long-Term Stock Incentive Plan (incorporated by reference to Exhibit 10.22 to Sirius XM Holdings Inc.’s Annual Report on Form 10-K for the year ended December 31, 2015 (File No. 001-34295)). *10.24 Form of Non-Qualified Stock Option Agreement pursuant to the Sirius XM Holdings Inc. 2015 Long-Term Stock Incentive Plan (incorporated by reference to Exhibit 10.23 to Sirius XM Holdings Inc.’s Annual Report on Form 10-K for the year ended December 31, 2015 (File No. 001-34295)). *10.25 Form of SVP Restricted Stock Unit Agreement pursuant to the Sirius XM Holdings Inc. 2015 Long-Term Stock Incentive Plan (incorporated by reference to Exhibit 10.24 to Sirius XM Holdings Inc.'s Annual Report on Form 10-K for the year ended December 31, 2016 (001-34295)). *10.26 Form of Performance-Based Restricted Stock Unit Agreement pursuant to the Sirius XM Holdings Inc. 2015 Long-Term Stock Incentive Plan (incorporated by reference to Exhibit 10.25 to Sirius XM Holdings Inc.'s Annual Report on Form 10-K for the year ended December 31, 2016 (001-34295)). *10.27 Form of SVP Non-Qualified Stock Option Agreement pursuant to the Sirius XM Holdings Inc. 2015 Long-Term Stock Incentive Plan (incorporated by reference to Exhibit 10.26 to Sirius XM Holdings Inc.'s Annual Report on Form 10-K for the year ended December 31, 2016 (001-34295)). *10.28 Form of Option Award Agreement between Sirius XM Radio Inc. and James E. Meyer (incorporated by reference to Exhibit 10.1 to Sirius XM Radio Inc.’s Current Report on Form 8-K filed October 16, 2009 (File No. 001-34295)). *10.29 Employment Agreement, dated as of November 21, 2022 between Sirius XM Radio Inc. and Patrick L. Donnelly (incorporated by reference to Exhibit 10.1 to Sirius XM Holdings Inc.'s Current Report on Form 8-K filed on November 22, 2022 (File No. 001-34295)). *10.30 Employment Agreement, dated as of December 14 , 2023 between Sirius XM Radio Inc. and Jennifer Witz (incorporated by reference to Exhibit 10.1 to Sirius XM Holdings Inc.'s Current Report on Form 8 -K filed on December 15 , 2023 ( File No. 001-34295)). *10.31 Letter Agreement, dated December 14, 2023, regarding private use of aircraft between Sirius XM Radio Inc. and Jennifer C. Witz (incorporated by reference to Exhibit 10.2 to Sirius XM Holdings Inc.'s Current Report on Form 8-K filed on December 15, 2023 (File No. 001-34295)). *10.32 Employment Agreement, dated as of December 27, 2020 between Sirius XM Radio Inc. and Scott A. Greenstein (incorporated by reference to Exhibit 10.1 to Sirius XM Holdings Inc.'s Current Report on Form 8-K filed on December 8, 2020 (File No. 001-34295)). *10.33 Employment Agreement, dated June 28, 2022, between Sirius XM Radio Inc. and Joseph A. Verbrugge (incorporated by reference to Exhibit 10.1 to Sirius XM Holdings Inc.’s Current Report on Form 8-K filed on June 29, 2022 (File No. 001-34295)). *10.34 Employment Agreement, dated December 10, 2021, between Sirius XM Radio Inc. and Joseph Inzerillo (incorporated by reference to Exhibit 10.1 to Sirius XM Holdings Inc.'s Current Report on Form 8-K filed on December 13, 2021 (File No. 001-34295)). 64 Table of Contents Exhibit Description *10.35 Employment Agreement, dated April 3, 2023 between Sirius XM Radio Inc. and Thomas D. Barry (incorporated by reference to Exhibit 10.1 to Sirius XM Holdings Inc.’s Current Report on Form 8-K filed on April 4, 2023 (File No. 001-34295)). *10.36 Assignment and Assumption Agreement, dated as of November 15, 2013, among Sirius XM Holdings Inc. and Sirius XM Radio Inc. (incorporated by reference to Exhibit 10.1 to Sirius XM Holdings Inc.’s Current Report on Form 8-K filed on November 15, 2013 (File No. 001-34295)). *10.37 Omnibus Amendment, dated November 15, 2013, to the XM Satellite Radio Holdings Inc. Talent Option Plan, the XM Satellite Radio Holdings Inc. 1998 Shares Award Plan, as amended, the Amended and Restated Sirius Satellite Radio 2003 Long-Term Stock Incentive Plan, the XM Satellite Radio Holdings Inc. 2007 Stock Incentive Plan and the Sirius XM Radio Inc. 2009 Long-Term Stock Incentive Plan and their Related Stock Option Agreements, Restricted Stock Agreements and Restricted Stock Unit Agreements (incorporated by reference to Exhibit 10.2 to Sirius XM Holdings Inc.’s Current Report on Form 8-K filed on November 15, 2013 (File No. 001-34295)). *10.38 Sirius XM Holdings Inc. Deferred Compensation Plan (incorporated by reference to Exhibit 10.2 to Sirius XM Holdings Inc.’s Current Report on Form 8-K filed on June 30, 2015 (File No. 001-34295)). 10.39 Tax Sharing Agreement, dated as of February 1, 2021 between Sirius XM Holdings Inc. and Liberty Media Corporation (incorporated by reference to Exhibit 10.44 to Sirius XM Holdings Inc.’s Annual Report on Form 10-K for the year ended December 31, 2020 filed on February 2, 2021 (File No. 001-34295)). 10.40 Section 253 Agreement, dated as of November 1, 2021, between Sirius XM Holdings Inc. and Liberty Media Corporation (incorporated by reference to Exhibit 10.2 to Sirius XM Holdings Inc.’s Current Report on Form 8-K filed on November 4, 2021 (File No. 001-34295)). 21.1 List of Subsidiaries (filed herewith). 23.1 Consent of KPMG LLP (filed herewith). 31.1 Certificate of Jennifer C. Witz, Chief Executive Officer and Director, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith). 31.2 Certificate of Thomas D. Barry, Executive Vice President and Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith). 32.1 Certificate of Jennifer C. Witz, Chief Executive Officer and Director, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith). 32.2 Certificate of Thomas D. Barry, Executive Vice President and Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith). 97.1 Incentive Compensation Clawback Policy (filed herewith). 99.1 Amended and Restated Certificate of Incorporation of Sirius XM Radio Inc., as amended (incorporated by reference to Exhibit 3.3 to Sirius XM Holdings Inc.'s Annual Report on Form 10-K for the year ended December 31, 2013 (File No. 001-34295)). 99.2 Amended and Restated By-Laws of Sirius XM Radio Inc., as amended (incorporated by reference to Exhibit 3.4 to Sirius XM Holdings Inc.'s Annual Report on Form 10-K for the year ended December 31, 2013 (File No. 001-34295)). 101.1 The following financial information from our Annual Report on Form 10-K for the year ended December 31, 2023 formatted in Inline eXtensible Business Reporting Language (Inline XBRL): (i) Consolidated Statements of Comprehensive Income for the years ended December 31, 2023, 2022 and 2021; (ii) Consolidated Balance Sheets as of December 31, 2023 and 2022; (iii) Consolidated Statements of Stockholders’ (Deficit) Equity for the years ended December 31, 2023, 2022 and 2021; (iv) Consolidated Statements of Cash Flows for the years ended December 31, 2023, 2022 and 2021; and (v) Combined Notes to Consolidated Financial Statements. 104.1 Cover Page Interactive Data File (Embedded within the Inline XBRL document and included in Exhibit 101.1) _________________ * This document has been identified as a management contract or compensatory plan or arrangement. 65 Table of Contents ** Pursuant to the Commission’s Orders Granting Confidential Treatment under Rule 406 of the Securities Act of 1933 or Rule 24(b)-2 under the Securities Exchange Act of 1934, certain confidential portions of this Exhibit were omitted by means of redacting a portion of the text. † Schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K. Holdings hereby undertakes to furnish supplemental copies of any of the omitted schedules upon request by the Securities and Exchange Commission (“SEC”); provided, however, that Holdings may request confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, for any schedules so furnished. The agreements and other documents filed as exhibits to this report are not intended to provide factual information or other disclosure other than with respect to the terms of the agreements or other documents themselves, and you should not rely on them for any other purpose. In particular, any representations and warranties made by us in these agreements or other documents were made solely within the specific context of the relevant agreement or document and may not describe the actual state of affairs for any other purpose as of the date they were made or at any other time. 66 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on this 1st day of February 2024. SIRIUS XM HOLDINGS INC. By: /s/ Thomas D. Barry Thomas D. Barry Executive Vice President and Chief Financial Officer (Principal Financial Officer and Authorized Officer) 67 Table of Contents Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Signature Title Date /s/ G REGORY B. M AFFEI Chairman of the Board of Directors and Director February 1, 2024 (Gregory B. Maffei) /s/ J AMES E. M EYER Vice Chairman of the Board of Directors and Director February 1, 2024 (James E. Meyer) /s/ J ENNIFER C. W ITZ Chief Executive Officer and Director (Principal Executive Officer) February 1, 2024 (Jennifer C. Witz) /s/ T HOMAS D. B ARRY Executive Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) February 1, 2024 (Thomas D. Barry) /s/ C ARY K REFETZ Senior Vice President and Controller February 1, 2024 (Cary Krefetz) /s/ D AVID A. B LAU Director February 1, 2024 (David A. Blau) /s/ E DDY W. H ARTENSTEIN Director and Lead Independent Director February 1, 2024 (Eddy W. Hartenstein) /s/ R OBIN S. P. H ICKENLOOPER Director February 1, 2024 (Robin S. P. Hickenlooper) /s/ J AMES P. H OLDEN Director February 1, 2024 (James P. Holden) /s/ E VAN D. M ALONE Director February 1, 2024 (Evan D. Malone) /s/ J ONELLE P ROCOPE Director February 1, 2024 (Jonelle Procope) /s/ M ICHAEL R APINO Director February 1, 2024 (Michael Rapino) /s/ K RISTINA M. S ALEN Director February 1, 2024 (Kristina M. Salen) /s/ C ARL E. V OGEL Director February 1, 2024 (Carl E. Vogel) /s/ D AVID M. Z ASLAV Director February 1, 2024 (David M. Zaslav) 68 Table of Contents SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Reports of Independent Registered Public Accounting Firm F- 2 Consolidated Statements of Comprehensive Income for the years ended December 31, 2023, 2022 and 2021 F- 5 Consolidated Balance Sheets as of December 31, 2023 and 2022 F- 6 Consolidated Statements of Stockholders' (Deficit) Equity for the years ended December 31, 2023, 2022 and 2021 F- 7 Consolidated Statements of Cash Flows for the years ended December 31, 2023, 2022, and 2021 F- 8 Notes to Consolidated Financial Statements F- 10 Schedule II - Schedule of Valuation and Qualifying Accounts F- 42 F-1 Table of Contents Report of Independent Registered Public Accounting Firm To the Stockholders and Board of Directors Sirius XM Holdings Inc.: Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Sirius XM Holdings Inc. and subsidiaries (the Company) as of December 31, 2023 and 2022, the related consolidated statements of comprehensive income, stockholders’ equity (deficit), and cash flows for each of the years in the three‑year period ended December 31, 2023, and the related notes and financial statement schedule II (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the years in the three‑year period ended December 31, 2023, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 1, 2024 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Sufficiency of audit evidence over certain subscriber and advertising revenues As discussed in Notes 2 and 18 to the consolidated financial statements, and disclosed in the consolidated statements of comprehensive income, the Company generated $ 8,953 million of revenues, of which $ 6,342 million was Sirius XM subscriber revenue and $ 1,589 million was Pandora advertising revenue, for the year ended December 31, 2023. The Company’s accounting for these subscriber and advertising revenues involved multiple information technology (IT) systems. We identified the evaluation of the sufficiency of audit evidence related to Sirius XM subscriber and Pandora advertising revenue as a critical audit matter. Evaluating the sufficiency of audit evidence obtained required auditor judgment due to the number of IT applications used by the Company that involved IT professionals with specialized skills and knowledge. The following are the primary procedures we performed to address this critical audit matter. We applied auditor judgment to determine the nature and extent of procedures to be performed over subscriber and advertising revenues. We evaluated the design and tested the operating effectiveness of certain internal controls related to the Sirius XM subscriber and Pandora advertising revenue recognition processes. We involved IT professionals with specialized skills and knowledge, who assisted in testing certain IT application controls and general IT controls used by the Company in its revenue recognition processes and testing the interface of relevant revenue data between different IT systems used in the revenue recognition processes. For Sirius XM subscriber revenue, we assessed the recorded revenue by comparing the total cash F-2 Table of Contents received during the year, adjusted for reconciling items, to the revenue recorded in the general ledger. For a sample of Pandora advertising revenues, we traced the recorded amounts to underlying source documents and system reports. We evaluated the sufficiency of audit evidence obtained by assessing the results of procedures performed, including the appropriateness of the nature and extent of such evidence. /s/ KPMG LLP We have served as the Company’s auditor since 2008. New York, New York February 1, 2024 F-3 Table of Contents Report of Independent Registered Public Accounting Firm To the Stockholders and Board of Directors Sirius XM Holdings Inc.: Opinion on Internal Control Over Financial Reporting We have audited Sirius XM Holdings Inc. and subsidiaries' (the Company) internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2023 and 2022, the related consolidated statements of comprehensive income, stockholders' equity (deficit), and cash flows for each of the years in the three-year period ended December 31, 2023, and the related notes and financial statement schedule II (collectively, the consolidated financial statements), and our report dated February 1, 2024 expressed an unqualified opinion on those consolidated financial statements. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting . Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ KPMG LLP New York, New York February 1, 2024 F-4 Table of Contents SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME For the Years Ended December 31, (in millions, except per share data) 2023 2022 2021 Revenue: Subscriber revenue $ 6,866 $ 6,892 $ 6,614 Advertising revenue 1,758 1,772 1,730 Equipment revenue 193 189 201 Other revenue 136 150 151 Total revenue 8,953 9,003 8,696 Operating expenses: Cost of services: Revenue share and royalties 2,895 2,802 2,672 Programming and content 618 604 559 Customer service and billing 476 497 501 Transmission 206 214 218 Cost of equipment 14 13 18 Subscriber acquisition costs 359 352 325 Sales and marketing 931 1,075 1,056 Engineering, design and development 322 285 265 General and administrative 550 525 514 Depreciation and amortization 554 536 533 Impairment, restructuring and acquisition costs 82 64 20 Total operating expenses 7,007 6,967 6,681 Income from operations 1,946 2,036 2,015 Other (expense) income: Interest expense ( 423 ) ( 422 ) ( 415 ) Loss on extinguishment of debt — — ( 83 ) Other (expense) income ( 5 ) ( 9 ) 9 Total other expense ( 428 ) ( 431 ) ( 489 ) Income before income taxes 1,518 1,605 1,526 Income tax expense ( 260 ) ( 392 ) ( 212 ) Net income $ 1,258 $ 1,213 $ 1,314 Foreign currency translation adjustment, net of tax 7 ( 19 ) — Total comprehensive income $ 1,265 $ 1,194 $ 1,314 Net income per common share: Basic $ 0.33 $ 0.31 $ 0.32 Diluted $ 0.32 $ 0.31 $ 0.32 Weighted average common shares outstanding: Basic 3,858 3,916 4,062 Diluted 3,888 3,990 4,143 See accompanying notes to the consolidated financial statements. F-5 Table of Contents SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in millions, except per share data) December 31, 2023 December 31, 2022 ASSETS Current assets: Cash and cash equivalents $ 216 $ 57 Receivables, net 709 655 Related party current assets 36 42 Prepaid expenses and other current assets 310 284 Total current assets 1,271 1,038 Property and equipment, net 1,754 1,499 Intangible assets, net 2,905 3,050 Goodwill 3,249 3,249 Related party long-term assets 497 488 Deferred tax assets 155 147 Operating lease right-of-use assets 279 315 Other long-term assets 264 236 Total assets $ 10,374 $ 10,022 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) Current liabilities: Accounts payable and accrued expenses $ 1,306 $ 1,248 Accrued interest 166 165 Current portion of deferred revenue 1,195 1,322 Current maturities of debt 505 196 Operating lease current liabilities 46 50 Related party current liabilities 8 — Total current liabilities 3,226 2,981 Long-term deferred revenue 88 81 Long-term debt 8,690 9,256 Deferred tax liabilities 509 565 Operating lease liabilities 292 320 Other long-term liabilities 134 170 Total liabilities 12,939 13,373 Commitments and contingencies (Note 16) Stockholders’ equity (deficit): Common stock, par value $ 0.001 per share; 9,000 shares authorized; 3,843 and 3,891 shares issued and outstanding at December 31, 2023 and December 31, 2022, respectively 4 4 Accumulated other comprehensive loss, net of tax 3 ( 4 ) Accumulated deficit ( 2,572 ) ( 3,351 ) Total stockholders’ equity (deficit) ( 2,565 ) ( 3,351 ) Total liabilities and stockholders’ equity (deficit) $ 10,374 $ 10,022 See accompanying notes to the consolidated financial statements. F-6 Table of Contents SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT) Common Stock Accumulated Other Comprehensive Income (Loss) Additional Paid-in Capital Treasury Stock Accumulated Deficit Total Stockholders’ Equity (Deficit) (in millions) Shares Amount Shares Amount Balance at January 1, 2021 4,176 $ 4 $ 15 $ — 3 $ ( 19 ) $ ( 2,285 ) $ ( 2,285 ) Comprehensive income, net of tax — — — — — — 1,314 1,314 Share-based payment expense — — — 215 — — — 215 Exercise of stock options and vesting of restricted stock units 38 — — 10 — — — 10 Withholding taxes on net share settlement of stock-based compensation — — — ( 103 ) — — — ( 103 ) Cash dividends paid on common stock, $ 0.0658845 per share — — — ( 126 ) — — ( 142 ) ( 268 ) Issuance of restricted stock units in connection with business acquisition — — — 4 — — — 4 Common stock repurchased — — — — 245 ( 1,512 ) — ( 1,512 ) Common stock retired ( 246 ) — — — ( 247 ) 1,523 ( 1,523 ) — Balance at December 31, 2021 3,968 $ 4 $ 15 $ — 1 $ ( 8 ) $ ( 2,636 ) $ ( 2,625 ) Cumulative effect of change in accounting principles — — — — — — ( 10 ) ( 10 ) Comprehensive income, net of tax — — ( 19 ) — — — 1,213 1,194 Share-based payment expense — — — 213 — — — 213 Exercise of stock options and vesting of restricted stock units 27 — — 4 — — — 4 Withholding taxes on net share settlement of stock-based compensation — — — ( 114 ) — — — ( 114 ) Capital contribution to Liberty Media related to Tax Sharing Agreement — — — — — — ( 35 ) ( 35 ) Cash dividends paid on common stock, $ 0.3400845 per share — — — ( 103 ) — — ( 1,236 ) ( 1,339 ) Common stock repurchased — — — — 103 ( 639 ) — ( 639 ) Common stock retired ( 104 ) — — — ( 104 ) 647 ( 647 ) — Balance at December 31, 2022 3,891 $ 4 $ ( 4 ) $ — — $ — $ ( 3,351 ) $ ( 3,351 ) Comprehensive income, net of tax — — 7 — — — 1,258 1,265 Share-based payment expense — — — 202 — — — 202 Exercise of stock options and vesting of restricted stock units 21 — — 4 — — — 4 Withholding taxes on net share settlement of stock-based compensation — — — ( 63 ) — — — ( 63 ) Capital contribution from Liberty Media related to Tax Sharing Agreement — — — — — — 35 35 Cash dividends paid on common stock, $ 0.0992 per share — — — ( 143 ) — — ( 240 ) ( 383 ) Common stock repurchased — — — — 69 ( 274 ) — ( 274 ) Common stock retired ( 69 ) — — — ( 69 ) 274 ( 274 ) — Balance at December 31, 2023 3,843 $ 4 $ 3 $ — — $ — $ ( 2,572 ) $ ( 2,565 ) See accompanying notes to the consolidated financial statements. F-7 Table of Contents SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS For the Years Ended December 31, (in millions) 2023 2022 2021 Cash flows from operating activities: Net income $ 1,258 $ 1,213 $ 1,314 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 554 536 533 Non-cash impairment and restructuring costs 26 61 24 Non-cash interest expense, net of amortization of premium 14 15 21 Change in fair value of contingent consideration — — ( 17 ) Provision for doubtful accounts 59 59 53 Loss on extinguishment of debt — — 83 Loss on unconsolidated entity investments, net 15 5 18 Dividend received from unconsolidated entity investment — 8 2 (Gain) loss on other investments ( 7 ) 10 ( 5 ) Share-based payment expense 184 197 202 Deferred income tax (benefit) expense ( 64 ) 202 131 Amortization of right-of-use assets 45 49 50 Changes in operating assets and liabilities: Receivables ( 114 ) 10 ( 108 ) Related party, net 49 ( 26 ) 7 Prepaid expenses and other current assets ( 26 ) ( 38 ) ( 47 ) Other long-term assets 1 ( 1 ) ( 8 ) Accounts payable and accrued expenses 62 ( 71 ) 104 Accrued interest 1 ( 8 ) ( 1 ) Deferred revenue ( 121 ) ( 148 ) ( 287 ) Operating lease liabilities ( 50 ) ( 63 ) ( 55 ) Other long-term liabilities ( 36 ) ( 34 ) ( 16 ) Net cash provided by operating activities 1,850 1,976 1,998 Cash flows from investing activities: Additions to property and equipment ( 650 ) ( 426 ) ( 388 ) Proceeds from insurance recoveries — — 225 (Purchase) sale of other investments 3 1 ( 4 ) Acquisition of business, net of cash acquired — ( 136 ) ( 14 ) Proceeds from sale of real estate — 15 — Investments in related parties and other equity investees ( 39 ) ( 2 ) ( 21 ) Repayment from related party — — 2 Net cash used in investing activities ( 686 ) ( 548 ) ( 200 ) Cash flows from financing activities: Proceeds from exercise of stock options 4 4 10 Taxes paid from net share settlements for stock-based compensation ( 63 ) ( 114 ) ( 103 ) Revolving credit facility borrowings 1,670 2,300 1,177 Revolving credit facility repayments ( 1,750 ) ( 2,220 ) ( 1,830 ) Proceeds from long-term borrowings, net of costs — 499 4,442 Principal payments of long-term borrowings ( 202 ) ( 6 ) ( 3,503 ) Payment of premiums on redemption of debt — — ( 62 ) Payment of contingent consideration for business acquisition ( 3 ) ( 3 ) ( 22 ) Distribution to parent related to Tax Sharing Agreement — ( 36 ) — Other financing activities ( 4 ) — — Common stock repurchased and retired ( 274 ) ( 647 ) ( 1,523 ) Dividends paid ( 383 ) ( 1,339 ) ( 268 ) Net cash used in financing activities ( 1,005 ) ( 1,562 ) ( 1,682 ) Net increase (decrease) in cash, cash equivalents and restricted cash 159 ( 134 ) 116 Cash, cash equivalents and restricted cash at beginning of period (1) 65 199 83 Cash, cash equivalents and restricted cash at end of period (1) $ 224 $ 65 $ 199 See accompanying notes to the consolidated financial statements. F-8 Table of Contents SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS - Continued For the Years Ended December 31, (in millions) 2023 2022 2021 Supplemental Disclosure of Cash and Non-Cash Flow Information Cash paid during the period for: Interest, net of amounts capitalized $ 405 $ 411 $ 393 Income taxes paid $ 278 $ 275 $ 82 Non-cash investing and financing activities: Finance lease obligations incurred to acquire assets $ 8 $ 14 $ — Accumulated other comprehensive income (loss), net of tax $ 7 $ ( 19 ) $ — Capital contribution from Liberty Media pursuant to Tax Sharing Agreement $ 35 $ — $ — (1) The following table reconciles cash, cash equivalents and restricted cash per the statement of cash flows to the balance sheet. The restricted cash balances are primarily due to letters of credit which have been issued to the landlords of leased office space. The terms of the letters of credit primarily extend beyond one year. (in millions) December 31, 2023 December 31, 2022 December 31, 2021 December 31, 2020 Cash and cash equivalents $ 216 $ 57 $ 191 $ 71 Restricted cash included in Other long-term assets 8 8 8 12 Total cash, cash equivalents and restricted cash at end of period $ 224 $ 65 $ 199 $ 83 See accompanying notes to the consolidated financial statements. F-9 Table of Contents SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars and shares in millions, except per share amounts) (1) Business & Basis of Presentation This Annual Report on Form 10-K presents information for Sirius XM Holdings Inc. and its subsidiaries (collectively “Holdings”). The terms “Holdings,” “we,” “us,” “our,” and “our company” as used herein, and unless otherwise stated or indicated by context, refer to Sirius XM Holdings Inc. and its subsidiaries. “Sirius XM” refers to our wholly owned subsidiary Sirius XM Radio Inc. and its subsidiaries. “Pandora” refers to Sirius XM's wholly owned subsidiary Pandora Media, LLC and its subsidiaries. Holdings has no operations independent of Sirius XM and Pandora. Business We operate two complementary audio entertainment businesses - one of which we refer to as “SiriusXM” and the second of which we refer to as “Pandora and Off-platform”. SiriusXM Our SiriusXM business features music, sports, entertainment, comedy, talk, news, traffic and weather channels and other content, as well as podcasts and infotainment services, in the United States on a subscription fee basis. SiriusXM packages include live, curated and certain exclusive and on demand programming. The SiriusXM service is distributed through our two proprietary satellite radio systems and streamed via applications for mobile devices, home devices and other consumer electronic equipment. Satellite radios are primarily distributed through automakers, retailers and our website. Our Sirius XM service is also available through our in-car user interface, which we call “360L,” that combines our satellite and streaming services into a single, cohesive in-vehicle entertainment experience. The primary source of revenue from our SiriusXM business is subscription fees, with most of our customers subscribing to monthly, quarterly, semi-annual or annual plans. We also derive revenue from advertising on select non-music channels, which is sold under the SiriusXM Media brand, direct sales of our satellite radios and accessories, and other ancillary services. As of December 31, 2023, our SiriusXM business had approximately 33.9 million subscribers. In addition to our audio entertainment businesses, we provide connected vehicle services to several automakers. These services are designed to enhance the safety, security and driving experience of consumers. We also offer a suite of data services that includes graphical weather and fuel prices, a traffic information service, and real-time weather services in boats and airplanes. SiriusXM also holds a 70 % equity interest and 33 % voting interest in Sirius XM Canada Holdings Inc. (“Sirius XM Canada”). Sirius XM Canada's subscribers are not included in our subscriber count or subscriber-based operating metrics. Pandora and Off-platform Our Pandora and Off-platform business operates a music, comedy and podcast streaming discovery platform, offering a personalized experience for each listener wherever and whenever they want to listen, whether through mobile devices, vehicle speakers or connected devices. Pandora enables listeners to create personalized stations and playlists, discover new content, hear artist- and expert-curated playlists, podcasts as well as search and play songs and albums on-demand. Pandora is available as (1) an ad-supported radio service, (2) a radio subscription service (Pandora Plus) and (3) an on-demand subscription service (Pandora Premium). As of December 31, 2023, Pandora had approximately 6.0 million subscribers. The majority of revenue from Pandora is generated from advertising on our Pandora ad-supported radio service which is sold under the SiriusXM Media brand. We also derive subscription revenue from our Pandora Plus and Pandora Premium subscribers. We also sell advertising on other audio platforms and in widely distributed podcasts, which we consider to be off-platform services. We have an arrangement with SoundCloud Holdings, LLC (“SoundCloud”) to be its exclusive ad sales representative in the US and certain European countries and offer advertisers the ability to execute campaigns across the Pandora and SoundCloud platforms. We also have arrangements to serve as the ad sales representative for certain podcasts. In addition, through AdsWizz Inc., we provide a comprehensive digital audio and programmatic advertising technology platform, F-10 Table of Contents SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued (Dollars and shares in millions, except per share amounts) which connects audio publishers and advertisers with a variety of ad insertion, campaign trafficking, yield optimization, programmatic buying, marketplace and podcast monetization solutions. Liberty Media As of December 31, 2023, Liberty Media Corporation (“Liberty Media”) beneficially owned, directly and indirectly, 83.4 % of the outstanding shares of our common stock. As a result, we are a “controlled company” for the purposes of the NASDAQ corporate governance requirements. Refer to Note 12 for more information regarding related parties. Basis of Presentation The accompanying consolidated financial statements of Holdings have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). All significant intercompany transactions have been eliminated in consolidation. Public companies are required to disclose certain information about their reportable operating segments. Operating segments are defined as significant components of an enterprise for which separate financial information is available and is evaluated on a regular basis by the chief operating decision maker in deciding how to allocate resources to an individual segment and in assessing performance of the segment. We have determined that we have two reportable segments as our chief operating decision maker, our Chief Executive Officer, assesses performance and allocates resources based on the financial results of these segments. Refer to Note 18 for information related to our segments. We have evaluated events subsequent to the balance sheet date and prior to the filing of this Annual Report on Form 10-K for the year ended December 31, 2023 and have determined that no events have occurred that would require adjustment to our consolidated financial statements. For a discussion of subsequent events that do not require adjustment to our consolidated financial statements refer to Note 19. We identified an error in our previously issued consolidated financial statements related to the presentation of cash flows associated with borrowings and repayments related to our Senior Secured Credit Facility. We have corrected this error in the accompanying consolidated statements of cash flows for the years ended December 31, 2022 and 2021 to present on a gross basis the borrowings from the revolving credit facility of $ 2,300 and $ 1,177 , respectively, and repayments of the revolving credit facility of $ 2,220 and $ 1,830 , respectively. The corrections had no impact to the total net cash used in financing activities in either period. We evaluated the materiality of these errors both qualitatively and quantitatively and have concluded that this error is immaterial to all impacted periods. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and footnotes. Estimates, by their nature, are based on judgment and available information. Actual results could differ materially from those estimates. Significant estimates inherent in the preparation of the accompanying consolidated financial statements include asset impairment, depreciable lives of our satellites, share-based payment expense and income taxes. F-11 Table of Contents SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued (Dollars and shares in millions, except per share amounts) (2) Summary of Significant Accounting Policies In addition to the significant accounting policies discussed in this Note 2, the following table includes our significant accounting policies that are described in other notes to our consolidated financial statements, including the number and page of the note: Significant Accounting Policy Note # Page # Acquisitions 3 F- 16 Fair Value Measurements 4 F- 16 Goodwill 8 F- 18 Intangible Assets 9 F- 19 Property and Equipment 10 F- 21 Equity Method Investments 12 F- 24 Share-Based Compensation 15 F- 29 Legal Reserves 16 F- 32 Income Taxes 17 F- 35 Cash and Cash Equivalents Our cash and cash equivalents consist of cash on hand, money market funds, certificates of deposit, in-transit credit card receipts and highly liquid investments purchased with an original maturity of three months or less. Revenue Recognition Revenue is measured according to Accounting Standards Codification (“ASC”) 606, Revenue - Revenue from Contracts with Customers , and is recognized based on consideration specified in a contract with a customer, and excludes any sales incentives and amounts collected on behalf of third parties. We recognize revenue when we satisfy a performance obligation by transferring control over a service or product to a customer. We report revenues net of any tax assessed by a governmental authority that is both imposed on, and concurrent with, a specific revenue-producing transaction between a seller and a customer in our consolidated statements of comprehensive income. Collected taxes are recorded within Other current liabilities until remitted to the relevant taxing authority. For equipment sales, we are responsible for arranging for shipping and handling. Shipping and handling costs billed to customers are recorded as revenue and are reported as a component of Cost of equipment. The following is a description of the principal activities from which we generate our revenue, including from self-pay and paid promotional subscribers, advertising, and sales of equipment. Subscriber revenue consists primarily of subscription fees and other ancillary subscription based revenues. Revenue is recognized on a straight line basis when the performance obligations to provide each service for the period are satisfied, which is over time as our subscription services are continuously transmitted and can be consumed by customers at any time. Consumers purchasing or leasing a vehicle with a factory-installed satellite radio may receive between a three and twelve month subscription to our service. In certain cases, the subscription fees for these consumers are prepaid by the applicable automaker. Prepaid subscription fees received from automakers or directly from consumers are recorded as deferred revenue and amortized to revenue ratably over the service period which commences upon sale. Activation fees are recognized over one month as the activation fees are non-refundable and do not provide for a material right to the customer. There is no revenue recognized for unpaid trial subscriptions. In some cases we pay a loyalty fee to the automakers when we receive a certain amount of payments from self-pay customers acquired from that automaker. These fees are considered incremental costs to obtain a contract and are, therefore, recognized as an asset and amortized to Subscriber acquisition costs over an average subscriber life. Revenue share and loyalty fees paid to an automaker offering a paid trial are accounted for as a reduction of revenue as the payment does not provide a distinct good or service. Music royalty fee primarily consists of U.S. music royalty fees (“MRF”) collected from subscribers. The related costs we incur for the right to broadcast music and other programming are recorded as Revenue share and royalties expense. Fees received from subscribers for the MRF are recorded as deferred revenue and amortized to Subscriber revenue ratably over the service period. F-12 Table of Contents SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued (Dollars and shares in millions, except per share amounts) We recognize revenue from the sale of advertising as performance obligations are satisfied, which generally occurs as ads are delivered. For our satellite radio service, ads are delivered when they are aired. For our streaming services, ads are delivered primarily based on impressions. Agency fees are calculated based on a stated percentage applied to gross billing revenue for our advertising inventory and are reported as a reduction of advertising revenue. Additionally, we pay certain third parties a percentage of advertising revenue. Advertising revenue is recorded gross of such revenue share payments as we control the advertising service, including the ability to establish pricing, and we are primarily responsible for providing the service. Advertising revenue share payments are recorded to Revenue share and royalties during the period in which the advertising is transmitted. Equipment revenue and royalties from the sale of satellite radios, components and accessories are recognized upon shipment, net of discounts and rebates. Shipping and handling costs billed to customers are recorded as revenue. Shipping and handling costs associated with shipping goods to customers are reported as a component of Cost of equipment. Other revenue primarily includes revenue recognized from royalties received from Sirius XM Canada. Customers pay for the services in advance of the performance obligation and therefore these prepayments are recorded as deferred revenue. The deferred revenue is recognized as revenue in our consolidated statement of comprehensive income as the services are provided. Changes in the deferred revenue balance during the year ended December 31, 2023 were not materially impacted by other factors. As the majority of our contracts are one year or less, we have utilized the optional exemption under ASC 606-10-50-14 and do not disclose information about the remaining performance obligations for contracts which have original expected durations of one year or less. As of December 31, 2023, less than seven percent of our total deferred revenue balance related to contracts that extend beyond one year. These contracts primarily include prepaid data trials, which are typically provided for three to five years , and self-pay customers who prepay for their audio subscriptions for up to three years . These amounts are recognized on a straight-line basis as our services are provided. Revenue Share We share a portion of our subscription revenues earned from self-pay subscribers with certain automakers. The terms of the revenue share agreements vary with each automaker, but are typically based upon the earned audio revenue as reported or gross billed audio revenue. Revenue share on self-pay revenue is recognized as an expense and recorded in Revenue share and royalties in our consolidated statements of comprehensive income. We also pay revenue share to certain talent on non-music stations on our satellite radio service and to podcast talent based on advertising revenue for the related channel or podcast. Revenue share on non-music channels and podcasts is recognized in Revenue share and royalties in our consolidated statements of comprehensive income when it is earned. In some cases, we pay minimum guarantees for revenue share to podcast owners which is recorded in Prepaid and other current assets in our consolidated balance sheets. The minimum guarantee is recognized in Revenue share and royalties primarily on a straight line basis over the contractual term. The prepaid balance is regularly reviewed for recoverability and any amount not deemed to be recoverable is recognized as an expense in the period. Royalties In connection with our businesses, we must enter into royalty arrangements with two sets of rights holders: holders of musical compositions copyrights (that is, the music and lyrics) and holders of sound recordings copyrights (that is, the actual recording of a work). Our Sirius XM and Pandora businesses use both statutory and direct music licenses as part of their businesses. We license varying rights - such as performance and mechanical rights - for use in our Sirius XM and Pandora businesses based on the various radio and interactive services they offer. The music rights licensing arrangements for our Sirius XM and Pandora businesses are complex. Musical Composition Copyrights We pay performance royalties for our Sirius XM and Pandora businesses to holders and rights administrators of musical compositions copyrights, including performing rights organizations and other copyright owners. These performance royalties are based on agreements with performing rights organizations which represent the holders of these performance rights. Our Sirius XM and Pandora businesses have arrangements with these performance rights organizations. Arrangements with Sirius F-13 Table of Contents SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued (Dollars and shares in millions, except per share amounts) XM generally include fixed payments during the term of the agreement and arrangements with Pandora for its ad-supported radio service have variable payments based on usage and ownership of a royalty pool. Pandora must also license reproduction rights, which are also referred to as mechanical rights, to offer the interactive features of the Pandora services. For our Pandora subscription services, copyright holders receive payments for these rights at the rates determined in accordance with the statutory license set forth in Section 115 of the United States Copyright Act. These mechanical royalties are calculated as the greater of a percentage of our revenue or a percentage of our payments to record labels. Sound Recording Copyrights For our non-interactive satellite radio or streaming services we may license sound recordings under direct licenses with the owners of sound recordings or based on the royalty rate established by the CRB. For our Sirius XM business, the royalty rate for sound recordings has been set by the CRB. The revenue subject to royalty includes subscription revenue from our U.S. satellite digital audio radio subscribers, and advertising revenue from channels other than those channels that make only incidental performances of sound recordings. The rates and terms permit us to reduce the payment due each month for those sound recordings that are separately licensed and sound recordings that are directly licensed from copyright owners and exclude from our revenue certain other items, such as royalties paid to us for intellectual property, sales and use taxes, bad debt expense and generally revenue attributable to areas of our business that do not involve the use of copyrighted sound recordings. For our Pandora business, we have entered into direct license agreements with major and independent music labels and distributors for a significant majority of the sound recordings that stream on the Pandora ad-supported service, Pandora Plus and Pandora Premium. For sound recordings that we stream and for which we have not entered into a direct license agreement with the sound recording rights holders, the sound recordings are streamed pursuant to the statutory royalty rates set by the CRB. Pandora pays royalties to owners of sound recordings on either a per-performance fee based on the number of sound recordings transmitted or a percentage of revenue associated with the applicable service. Certain of these agreements also require Pandora to pay a per-subscriber minimum amount. Programming Costs Programming costs which are for a specified number of events are amortized on an event-by-event basis; programming costs which are for a specified season or include programming through a dedicated channel are amortized over the season or period on a straight-line basis. We allocate a portion of certain programming costs which are related to sponsorship and marketing activities to Sales and marketing expense on a straight-line basis over the term of the agreement. Advertising Costs Media is expensed when aired and advertising production costs are expensed as incurred. Advertising production costs include expenses related to marketing and retention activities, including expenses related to direct mail, outbound telemarketing and email communications. We also incur advertising production costs related to cooperative marketing and promotional events and sponsorships. During the years ended December 31, 2023, 2022 and 2021, we recorded advertising costs of $ 421 , $ 513 and $ 515 , respectively. These costs are reflected in Sales and marketing expense in our consolidated statements of comprehensive income. Subscriber Acquisition Costs Subscriber acquisition costs consist of costs incurred to acquire new subscribers which include hardware subsidies paid to radio manufacturers, distributors and automakers, including subsidies paid to automakers who include a satellite radio and a prepaid subscription to our service in the sale or lease price of a new vehicle; subsidies paid for chipsets and certain other components used in manufacturing radios; device royalties for certain radios and chipsets; commissions paid to retailers and automakers as incentives to purchase, install and activate radios; product warranty obligations; freight; and provisions for inventory allowance attributable to inventory consumed in our automotive and retail distribution channels. Subscriber acquisition costs do not include advertising costs, loyalty payments to distributors and dealers of radios and revenue share payments to automakers and retailers of radios. F-14 Table of Contents SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued (Dollars and shares in millions, except per share amounts) Subsidies paid to radio manufacturers and automakers are expensed upon installation, shipment, receipt of product or activation and are included in Subscriber acquisition costs because we are responsible for providing the service to the customers. Commissions paid to retailers and automakers are expensed upon either the sale or activation of radios. Chipsets that are shipped to radio manufacturers and held on consignment are recorded as inventory and expensed as Subscriber acquisition costs when placed into production by radio manufacturers. Costs for chipsets are expensed as Subscriber acquisition costs when the automaker confirms receipt. Research & Development Costs Research and development costs are expensed as incurred and primarily include the cost of new product development, chipset design, software development and engineering. During the years ended December 31, 2023, 2022 and 2021, we recorded research and development costs of $ 276 , $ 246 and $ 229 , respectively. These costs are reported as a component of Engineering, design and development expense in our consolidated statements of comprehensive income. Recent Accounting Pronouncements Accounting Standard Update 2023-09, Improvements to Income Tax Disclosures (“ASU 2023-09”) . In December 2023, the FASB issued ASU 2023-09, which requires more detailed income tax disclosures. The guidance requires entities to disclose disaggregated information about their effective tax rate reconciliation as well as expanded information on income taxes paid by jurisdiction. The disclosure requirements will be applied on a prospective basis, with the option to apply them retrospectively. The standard is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. We are evaluating the disclosure requirements related to the new standard. Accounting Standard Update 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures ("ASU 2023-07"). In November 2023, the FASB issued ASU 2023-07, which is intended to improve reportable segment disclosure requirements, primarily through additional disclosures about significant segment expenses. The standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The amendments should be applied retrospectively to all prior periods presented in the financial statements. We are evaluating the disclosure requirements related to the new standard. Accounting Standard Update ( “ ASU ” ) 2023-02, Investments—Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method . In March 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-02 which amended the guidance related to accounting for investments in tax credit structures to allow the use of the proportional amortization method. The amendment permits reporting entities to elect to account for their equity investments in tax credit structures using the proportional amortization method if certain conditions are met. This amendment requires entities to make disclosures about all investments in a tax credit program for which they have elected to account for using the proportional amortization method, including those investments in an elected tax credit program that do not meet the conditions to apply the proportional amortization method. We expect to elect the proportional amortization method for qualifying investments in tax credit structures when the amendments in this ASU become effective in the first quarter of 2024 using the modified retrospective method. We are evaluating the impact ASU 2023-02 will have on our consolidated financial statements, however, we do not expect the impacts of adoption to materially impact our results from our existing investments. Future investments could have a material impact to our consolidated assets and liabilities related to the capitalization of unfunded future commitments and results of operations related to the amortization of any investment balance in proportion to the income tax benefits received. Recently Adopted Accounting Policies ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40) . In August 2020, the FASB issued ASU 2020-06 which removes the separation models for convertible debt with cash conversion or beneficial conversion features. ASU 2020-06 also requires the application of the if-converted method for calculating diluted earnings per share as the treasury stock method will no longer be permitted for convertible instruments. We adopted ASU 2020-06 as of January 1, 2022 using the modified retrospective approach and recorded a $ 14 increase to the carrying value of Pandora's 1.75 % Convertible Senior Notes due 2023 and an increase of $ 10 , net of tax, to our accumulated deficit. The adoption of ASU 2020-06 did not have a material impact on our diluted earnings per share. F-15 Table of Contents SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued (Dollars and shares in millions, except per share amounts) (3) Acquisitions On May 20, 2022, we completed an acquisition for total cash consideration of $ 93 . We recognized goodwill of $ 69 , indefinite-lived intangible assets of $ 1 and other assets of $ 23 . The other assets represent acquired content which will be amortized over its estimated useful life to Programming and content in our consolidated statements of comprehensive income. On January 12, 2022, we completed an acquisition for total cash consideration of $ 43 . We recognized goodwill of $ 29 , other definite-lived intangible assets of $ 19 and liabilities of $ 4 . On April 23, 2021, we completed an acquisition for total consideration of $ 27 which included $ 20 in cash, a $ 3 deferred cash payment and $ 4 in restricted stock units. We recognized goodwill of $ 23 and other assets of $ 5 . There were no acquisition related costs recognized for the year ended December 31, 2023. Acquisition related costs for the years ended December 31, 2022 and 2021 were $ 2 and $ 12 , respectively. (4) Fair Value Measurements The fair value of a financial instrument is the amount at which the instrument could be exchanged in an orderly transaction between market participants. As of December 31, 2023 and 2022, the carrying amounts of cash and cash equivalents, receivables, and accounts payable approximated fair value due to the short-term nature of these instruments. ASC 820, Fair Value Measurements and Disclosures , establishes a fair value hierarchy for input into valuation techniques as follows: i. Level 1 input: unadjusted quoted prices in active markets for identical instrument; ii. Level 2 input: observable market data for the same or similar instrument but not Level 1, including quoted prices for identical or similar assets or liabilities in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and iii. Level 3 input: unobservable inputs developed using management's assumptions about the inputs used for pricing the asset or liability. Investments are periodically reviewed for impairment and an impairment is recorded whenever declines in fair value below carrying value are determined to be other than temporary. In making this determination, we consider, among other factors, the severity and duration of the decline as well as the likelihood of a recovery within a reasonable timeframe. Our assets and liabilities measured at fair value were as follows: December 31, 2023 December 31, 2022 Level 1 Level 2 Level 3 Total Fair Value Level 1 Level 2 Level 3 Total Fair Value Liabilities: Debt (a) — $ 8,523 — $ 8,523 — $ 8,362 — $ 8,362 (a) The fair value for non-publicly traded instruments is based upon estimates from a market maker and brokerage firm. Refer to Note 13 for information related to the carrying value of our debt as of December 31, 2023 and 2022. (5) Restructuring Costs During the year ended December 31, 2023, restructuring costs were $ 49 . In 2023, we initiated measures to pursue greater efficiency and to realign our business and focus on strategic priorities. As part of these measures, we reduced the size of our workforce by approximately 475 roles, or 8 %. We recorded a charge of $ 34 primarily related to severance and other related costs. In addition, we vacated two of our leased locations and recorded impairments of $ 12 to reduce the carrying value of the related right of use assets to their estimated fair value. Additionally, we accrued expenses of $ 3 for which we will not recognize any future economic benefits. The restructuring and related impairment charges were recorded to Impairment, restructuring and acquisition costs in our consolidated statements of comprehensive income. During the year ended December 31, 2022, we evaluated our office space needs, and, based on this, we vacated certain office spaces and recorded an impairment of $ 16 to reduce the carrying value of the related right of use assets to their estimated fair values. Additionally, we wrote off fixed assets of $ 5 in connection with furniture and equipment located at the impaired office spaces. Separately, we performed an analysis surrounding initiatives that we are no longer pursuing and recorded an F-16 Table of Contents SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued (Dollars and shares in millions, except per share amounts) impairment of $ 43 associated with terminated software projects and an impairment of $ 6 related to severance. The total charge of $ 70 was recorded to Impairment, restructuring and acquisition costs in our consolidated statements of comprehensive income. During the year ended December 31, 2021, we evaluated our office space needs and, based on this, we vacated certain office spaces and recorded an impairment of $ 18 to reduce the carrying value of the related right of use assets to their estimated fair values. Additionally, we accrued expenses of $ 6 for which we will not recognize any future economic benefits and wrote off leasehold improvements of $ 1 . The total charge of $ 25 was recorded to Impairment, restructuring and acquisition costs in our consolidated statements of comprehensive income. (6) Earnings per Share Basic net income per common share is calculated by dividing the income available to common stockholders by the weighted average common shares outstanding during each reporting period. Diluted net income per common share adjusts the weighted average number of common shares outstanding for the potential dilution that could occur if common stock equivalents (stock options, restricted stock units and convertible debt) were exercised or converted into common stock, calculated using the treasury stock method. We had no participating securities during the years ended December 31, 2023, 2022 and 2021. Common stock equivalents of 152 , 92 and 93 for the years ended December 31, 2023, 2022 and 2021, respectively, were excluded from the calculation of diluted net income per common share as the effect would have been anti-dilutive. For the Years Ended December 31, 2023 2022 2021 Numerator: Net Income available to common stockholders for basic net income per common share $ 1,258 $ 1,213 $ 1,314 Effect of interest on assumed conversions of convertible notes, net of tax 1 4 8 Net Income available to common stockholders for dilutive net income per common share $ 1,259 $ 1,217 $ 1,322 Denominator: Weighted average common shares outstanding for basic net income per common share 3,858 3,916 4,062 Weighted average impact of assumed convertible notes 12 31 30 Weighted average impact of dilutive equity instruments 18 43 51 Weighted average shares for diluted net income per common share 3,888 3,990 4,143 Net income per common share: Basic $ 0.33 $ 0.31 $ 0.32 Diluted $ 0.32 $ 0.31 $ 0.32 (7) Receivables, net Receivables, net, includes customer accounts receivable, receivables from distributors and other receivables. We do not have any customer receivables that individually represent more than ten percent of our receivables. Customer accounts receivable, net, includes receivables from our subscribers and advertising customers, including advertising agencies and other customers, and is stated at amounts due, net of an allowance for doubtful accounts. Our allowance for doubtful accounts is based upon our assessment of various factors. We consider historical experience, the age of the receivable balances, current economic conditions, industry experience and other factors that may affect the counterparty’s ability to pay. Bad debt expense is included in Customer service and billing expense in our consolidated statements of comprehensive income. F-17 Table of Contents SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued (Dollars and shares in millions, except per share amounts) Receivables from distributors primarily include billed and unbilled amounts due from automakers for services included in the sale or lease price of vehicles, as well as billed amounts due from wholesale distributors of our satellite radios. Other receivables primarily include amounts due from manufacturers of our radios, modules and chipsets where we are entitled to subsidies and royalties based on the number of units produced. We have not established an allowance for doubtful accounts for our receivables from distributors or other receivables as we have historically not experienced any significant collection issues with automakers or other third parties and do not expect issues in the foreseeable future. Receivables, net, consists of the following: December 31, 2023 December 31, 2022 Gross customer accounts receivable $ 631 $ 585 Allowance for doubtful accounts ( 15 ) ( 11 ) Customer accounts receivable, net $ 616 $ 574 Receivables from distributors 56 53 Other receivables 37 28 Total receivables, net $ 709 $ 655 (8) Goodwill Goodwill represents the excess of the purchase price over the estimated fair value of the net tangible and identifiable intangible assets acquired in business combinations. Our annual impairment assessment of our two reporting units is performed as of the fourth quarter of each year, and an assessment is performed at other times if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. ASC 350, Intangibles - Goodwill and Other , states that an entity should perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. Our Sirius XM reporting unit, which has an allocated goodwill balance of $ 2,290 , had a negative carrying amount as of December 31, 2023. During the year ended December 31, 2023, we elected to perform a qualitative impairment assessment which indicated that the fair value of our reporting units exceeded their carrying values and therefore were not at risk of impairment. No impairment losses were recorded for goodwill during the years ended December 31, 2023, 2022 and 2021. As of December 31, 2023, the cumulative balance of goodwill impairments recorded was $ 5,722 , of which $ 4,766 was recognized during the year ended December 31, 2008 and is included in the carrying amount of the goodwill allocated to our Sirius XM reporting unit and $ 956 was recognized during the year ended December 31, 2020 and is included in the carrying amount of the goodwill allocated to our Pandora and Off-platform reporting unit. As of December 31, 2023, the carrying amount of goodwill for our Sirius XM and Pandora and Off-platform reporting units was $ 2,290 and $ 959 , respectively. Refer to the table below for our goodwill activity for the years ended December 31, 2023 and 2022: Sirius XM Pandora and Off-platform Total Balance at January 1, 2022 $ 2,290 $ 861 $ 3,151 Acquisition — 98 98 Balance at December 31, 2022 2,290 959 3,249 Acquisition — — — Balance at December 31, 2023 $ 2,290 $ 959 $ 3,249 F-18 Table of Contents SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued (Dollars and shares in millions, except per share amounts) (9) Intangible Assets Our intangible assets include the following: December 31, 2023 December 31, 2022 Weighted Average Useful Lives Gross Carrying Value Accumulated Amortization Net Carrying Value Gross Carrying Value Accumulated Amortization Net Carrying Value Indefinite life intangible assets: FCC licenses Indefinite $ 2,084 $ — $ 2,084 $ 2,084 $ — $ 2,084 Trademarks Indefinite 250 — 250 250 — 250 Definite life intangible assets: OEM relationships 15 years 220 ( 149 ) 71 220 ( 135 ) 85 Licensing agreements 12 years 3 ( 3 ) — 45 ( 45 ) — Software and technology 7 years 28 ( 22 ) 6 31 ( 21 ) 10 Due to Acquisitions recorded to Pandora and Off-platform Reporting Unit: Indefinite life intangible assets: Trademarks Indefinite 312 — 312 312 — 312 Definite life intangible assets: Customer relationships 8 years 442 ( 279 ) 163 442 ( 225 ) 217 Software and technology 5 years 391 ( 372 ) 19 391 ( 299 ) 92 Total intangible assets $ 3,730 $ ( 825 ) $ 2,905 $ 3,775 $ ( 725 ) $ 3,050 Indefinite Life Intangible Assets We have identified our FCC licenses and XM and Pandora trademarks as indefinite life intangible assets after considering the expected use of the assets, the regulatory and economic environment within which they are used and the effects of obsolescence on their use. We hold FCC licenses to operate our satellite digital audio radio service and provide ancillary services. Each of the FCC licenses authorizes us to use radio spectrum, a reusable resource that does not deplete or exhaust over time. ASC 350-30-35, Intangibles - Goodwill and Other , provides for an option to first perform a qualitative assessment to determine whether it is more likely than not that an asset is impaired. If the qualitative assessment supports that it is more likely than not that the fair value of the asset exceeds its carrying value, a quantitative impairment test is not required. If the qualitative assessment does not support the fair value of the asset, then a quantitative assessment is performed. Our annual impairment assessment of our identifiable indefinite lived intangible assets is performed as of the fourth quarter of each year. An assessment is performed at other times if an event occurs or circumstances change that would more likely than not reduce the fair value of the asset below its carrying value. If the carrying value of the intangible assets exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. We completed a qualitative assessment of our FCC licenses and Pandora trademarks during the fourth quarter of 2023. As of the date of our annual assessment, our qualitative impairment assessment of the fair value of our indefinite intangible assets indicated that the fair value of such assets exceeded their carrying value and therefore were not at risk of impairment. We completed a quantitative assessment of our FCC licenses and Pandora trademarks during the fourth quarter of 2022. As of the date of our annual assessment for 2022, our impairment assessment of the fair value of our indefinite intangible assets indicated that the estimated fair value of our FCC licenses and Pandora trademarks exceeded their carrying values and therefore no impairment existed. We completed our qualitative assessments of our FCC licenses and XM and Pandora trademarks during the fourth quarter of 2021. As of the date of our annual assessment, our qualitative impairment assessment of the fair value of our F-19 Table of Contents SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued (Dollars and shares in millions, except per share amounts) indefinite intangible assets indicated that the fair value of such assets exceeded their carrying value and therefore were not at risk of impairment. Definite Life Intangible Assets Definite-lived intangible assets are amortized over their respective estimated useful lives to their estimated residual values, in a pattern that reflects when the economic benefits will be consumed, and are reviewed for impairment under the provisions of ASC 360-10-35, Property, Plant and Equipment/Overall/Subsequent Measurement . We review intangible assets subject to amortization for impairment whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable. If the sum of the expected cash flows, undiscounted and without interest, is less than the carrying amount of the asset, an impairment loss is recognized in an amount by which the carrying amount of the asset exceeds its fair value. Amortization expense for all definite life intangible assets was $ 144 , $ 156 and $ 154 for the years ended December 31, 2023, 2022 and 2021, respectively. There were retirements of definite lived intangible assets of $ 44 and we recognized a related impairment loss of $ 1 during year ended December 31, 2023. There were no retirements or impairments of definite lived intangible assets during the years ended December 31, 2022 and 2021. The expected amortization expense for each of the fiscal years 2024 through 2028 and for periods thereafter is as follows: Years ending December 31, Amount 2024 $ 77 2025 71 2026 71 2027 25 2028 15 Thereafter — Total definite life intangible assets, net $ 259 F-20 Table of Contents SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued (Dollars and shares in millions, except per share amounts) (10) Property and Equipment Property and equipment, including satellites, are stated at cost, less accumulated depreciation. Equipment under 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. During the year ended December 31, 2023, we retired property and equipment of $ 289 , and recorded related impairment charges of $ 14 primarily related to terminated software projects. During the year ended December 31, 2022, we recorded impairment charges of $ 48 related to the write off of terminated software projects and fixed assets in connection with furniture and equipment located at impaired office spaces. Refer to the Note 5 for more information. During the year ended December 31, 2021, we recorded an impairment charge of $ 220 related to our SXM-7 satellite which was offset by insurance recoveries. Refer to the discussion below for more information. Property and equipment, net, consists of the following: December 31, 2023 December 31, 2022 Satellite system $ 1,598 $ 1,841 Terrestrial repeater network 117 118 Leasehold improvements 106 100 Broadcast studio equipment 146 133 Capitalized software and hardware 2,178 1,821 Satellite telemetry, tracking and control facilities 84 76 Furniture, fixtures, equipment and other 110 89 Land 32 32 Building 74 70 Construction in progress 538 313 Total property and equipment 4,983 4,593 Accumulated depreciation ( 3,229 ) ( 3,094 ) Property and equipment, net $ 1,754 $ 1,499 F-21 Table of Contents SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued (Dollars and shares in millions, except per share amounts) Construction in progress consists of the following: December 31, 2023 December 31, 2022 Satellite system $ 490 $ 212 Terrestrial repeater network 7 10 Capitalized software and hardware 17 56 Other 24 35 Construction in progress $ 538 $ 313 Depreciation and amortization expense on property and equipment was $ 410 , $ 380 and $ 379 for the years ended December 31, 2023, 2022 and 2021, respectively. In addition to the property and equipment impaired above, we sold real estate during the year ended December 31, 2022 for net proceeds of $ 15 resulting in a gain of $ 8 which has been recorded to Impairment, restructuring and acquisition costs in our consolidated statements of comprehensive income. 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 $ 16 , $ 5 and $ 7 for the years ended December 31, 2023, 2022, and 2021, respectively, which related to the construction of our SXM-9, SXM-10, SXM-11 and SXM-12 satellites. We also capitalize a portion of share-based compensation related to employee time for capitalized software projects. Capitalized share-based compensation costs were $ 18 , $ 16 and $ 13 for the years ended December 31, 2023, 2022 and 2021, respectively. Satellites As of December 31, 2023, we operated 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, 2023: Satellite Description Year Delivered Estimated End of Depreciable Life FCC License Expiration Year SIRIUS FM-5 2009 2024 2025 SIRIUS FM-6 2013 2028 2030 XM-3 2005 2020 2026 XM-5 2010 2025 2026 SXM-8 2021 2036 2029 During the year ended December 30, 2021, we recorded an impairment charge of $ 220 to Impairment, restructuring and acquisition costs in our consolidated statements of comprehensive income related to the total loss of our SXM-7 satellite. We procured insurance for SXM-7 to cover the risks associated with the satellite's launch and first year of in-orbit operation. The aggregate coverage under the insurance policies with respect to SXM-7 was $ 225 . During the year ended December 30, 2021, we collected $ 225 of insurance recoveries. Of this amount, $ 220 was recorded as a reduction to Impairment, restructuring and acquisition costs during year ended December 30, 2021. The remaining $ 5 was recorded in Other income during the year ended December 30, 2021. SXM-7 remains in-orbit at its assigned orbital location, but is not being used to provide satellite radio service. During 2023, we removed our XM-4 satellite from service and in October 2023 we completed the de-orbiting and decommissioning of the satellite. Our XM-3 satellite remains available as an in-orbit spare. (11) Leases We have operating and finance leases for offices, terrestrial repeaters, data centers and certain equipment. Our leases have remaining lease terms of less than 1 year to 19 years, some of which may include options to extend the leases for up to 5 years, and some of which may include options to terminate the leases within 1 year. We elected the practical expedient to F-22 Table of Contents SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued (Dollars and shares in millions, except per share amounts) account for the lease and non-lease components as a single component. Additionally, we elected the practical expedient to not recognize right-of-use assets or lease liabilities for short-term leases, which are those leases with a term of twelve months or less at the lease commencement date. During the years ended December 31, 2023, 2022 and 2021, we ceased using certain leased locations and recorded an impairment charge of $ 12 , $ 16 and $ 18 , respectively, to write down the carrying value of the right-of-use assets for these locations to their estimated fair values. Refer to Note 5 for additional information. The components of lease expense were as follows: For the Years Ended December 31, 2023 2022 Operating lease cost $ 61 $ 76 Finance lease cost 4 1 Sublease income ( 3 ) ( 3 ) Total lease cost $ 62 $ 74 Supplemental cash flow information related to leases was as follows: For the Years Ended December 31, 2023 2022 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 77 $ 81 Financing cash flows from finance leases $ 5 $ 1 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ 16 $ 28 Supplemental balance sheet information related to leases was as follows: December 31, 2023 December 31, 2022 Operating Leases Operating lease right-of-use assets $ 279 $ 315 Operating lease current liabilities 46 50 Operating lease liabilities 292 320 Total operating lease liabilities $ 338 $ 370 December 31, 2023 December 31, 2022 Finance Leases Property and equipment, gross $ 33 $ 22 Accumulated depreciation ( 12 ) ( 8 ) Property and equipment, net $ 21 $ 14 Current maturities of debt $ 5 $ 3 Long-term debt 10 9 Total finance lease liabilities $ 15 $ 12 F-23 Table of Contents SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued (Dollars and shares in millions, except per share amounts) December 31, 2023 December 31, 2022 Weighted Average Remaining Lease Term Operating leases 7 years 8 years Finance leases 3 years 4 years December 31, 2023 December 31, 2022 Weighted Average Discount Rate Operating leases 5.2 % 5.2 % Finance leases 2.3 % 2.3 % Maturities of lease liabilities were as follows: Operating Leases Finance Leases Year ending December 31, 2024 $ 61 $ 4 2025 64 6 2026 61 5 2027 55 — 2028 48 — Thereafter 116 — Total future minimum lease payments 405 15 Less imputed interest ( 67 ) — Total $ 338 $ 15 (12) Related Party Transactions In the normal course of business, we enter into transactions with related parties such as Sirius XM Canada and SoundCloud. Liberty Media As of December 31, 2023, Liberty Media beneficially owned, directly and indirectly, 83.4 % of the outstanding shares of our common stock. Liberty Media has three of its executives and one of its directors on our board of directors. Gregory B. Maffei, the President and Chief Executive Officer of Liberty Media, is the Chairman of our board of directors. On February 1, 2021, Holdings entered into a tax sharing agreement with Liberty Media governing the allocation of consolidated U.S. income tax liabilities and setting forth agreements with respect to other tax matters. The tax sharing agreement was negotiated and approved by a special committee of Holdings’ board of directors, all of whom are independent of Liberty Media. Refer to Note 17 for more information regarding the tax sharing agreement. On December 11, 2023, Holdings entered into definitive agreements whereby, subject to the terms thereof, Liberty Sirius XM Holdings Inc., a Delaware corporation and a wholly owned subsidiary of Liberty Media (“New Sirius”), would split-off from Liberty Media. The transactions would be effectuated by means of a redemptive split-off of New Sirius (the “Split-Off”), which will own all of the assets and liabilities attributed to Liberty Media’s Series A Liberty SiriusXM common stock (“LSXMA”), Series B Liberty SiriusXM common stock (“LSXMB”) and Series C Liberty SiriusXM common stock (“LSXMK”, together with the LSXMB and LSXMA stock, the “Liberty SiriusXM Group”). Following the Split-Off, New Sirius will combine with Holdings through the merger of Radio Merger Sub, LLC, a Delaware limited liability company and a wholly owned subsidiary of New Sirius (“Merger Sub”), with Holdings, with Holdings becoming a wholly owned subsidiary of New Sirius (the “Merger” and, together with the Split-Off, the “Transactions”). As part of the Merger, New Sirius will be renamed “Sirius XM Holdings Inc.” F-24 Table of Contents SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued (Dollars and shares in millions, except per share amounts) To effect the Transactions, on December 11, 2023, Liberty Media entered into (i) a Reorganization Agreement (the “Reorganization Agreement”) with Holdings and New Sirius, and (ii) an Agreement and Plan of Merger (the “Merger Agreement”) with New Sirius, Holdings and Merger Sub. In connection with the Merger Agreement and the Reorganization Agreement, on December 11, 2023, certain trusts related to Dr. John C. Malone (collectively, the “Malone Stockholders”) entered into a voting agreement (the “Voting Agreement”) with Liberty Media, Holdings and New Sirius, pursuant to which, among other things, the Malone Stockholders agreed, subject to the terms of the Voting Agreement, to vote their respective shares of Liberty Media’s LSXMA and LSXMB in favor of the Split-Off. The Transactions have been unanimously approved by Liberty Media’s Board of Directors and a Special Committee of the Board of Directors of Holdings and by Holdings’ Board of Directors. The Transactions are expected to be completed early in the third quarter of 2024, subject to approval by a majority of the aggregate voting power of the shares of Liberty SiriusXM common stock present, whether in-person or by proxy, at a stockholder meeting, the receipt by Liberty Media and New Sirius of tax opinions from their respective tax counsel, as well as the receipt of required regulatory approvals and the satisfaction of other customary closing conditions. A subsidiary of Liberty Media owning a majority of the outstanding shares of Holdings has delivered a written consent approving the Transactions on behalf of a majority of Holdings’ stockholders. Following the Transactions, Liberty Media and New Sirius will operate independently, and neither is expected to have any ownership interest in the other. All of the executive officers of Holdings immediately prior to consummation of the Transactions will be the initial executive officers of New Sirius, and New Sirius will continue to operate under the SiriusXM name and brand. The Reorganization Agreement, the Merger Agreement and the Voting Agreement are filed as exhibits to this Annual Report on Form 10-K. During the year ended December 31, 2023, we recognized costs associated with the Transactions of $ 16 which were recorded to Impairment, restructuring and acquisition costs in our consolidated statements of comprehensive income. Sirius XM Canada Sirius XM holds a 70 % equity interest and 33 % voting interest in Sirius XM Canada, a privately held corporation. We own 591 shares of preferred stock of Sirius XM Canada, which has a liquidation preference of one Canadian dollar per share. Sirius XM Canada is accounted for as an equity method investment, and its results are not consolidated in our consolidated financial statements. Sirius XM Canada does not meet the requirements for consolidation as we do not have the ability to direct the most significant activities that impact Sirius XM Canada's economic performance. On March 15, 2022, Sirius XM and Sirius XM Canada entered into an amended and restated services and distribution agreement. Pursuant to the amended and restated services and distribution agreement, the fee payable by Sirius XM Canada to Sirius XM was modified from a fixed percentage of revenue to a variable fee, based on a target operating profit for Sirius XM Canada. Such variable fee is expected to be evaluated annually based on comparable companies. In accordance with the amended and restated services and distribution agreement, the fee is payable on a monthly basis, in arrears, beginning January 1, 2022. Our related party long-term assets as of December 31, 2023 and December 31, 2022 included the carrying value of our investment balance in Sirius XM Canada of $ 423 and $ 412 , respectively, and, as of each of December 31, 2023 and December 31, 2022, also included $ 8 , for the long-term value of the outstanding loan to Sirius XM Canada. Sirius XM Canada paid gross dividends to us of $ 1 , $ 9 and $ 2 during the years ended December 31, 2023, 2022 and 2021, respectively. Dividends are first recorded as a reduction to our investment balance in Sirius XM Canada to the extent a balance exists and then as Other (expense) income for any remaining portion. We recorded revenue from Sirius XM Canada as Other revenue in our consolidated statements of comprehensive income of $ 104 , $ 111 and $ 101 during the years ended December 31, 2023, 2022 and 2021, respectively. F-25 Table of Contents SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued (Dollars and shares in millions, except per share amounts) SoundCloud We have an investment in SoundCloud which is accounted for as an equity method investment and recorded in Related party long-term assets in our consolidated balance sheets. Sirius XM has appointed two individuals to serve on SoundCloud's ten -member board of managers. Sirius XM's share of SoundCloud's net loss was $ 2 , $ 6 and $ 2 for the years ended December 31, 2023, 2022 and 2021, respectively, which was recorded in Other (expense) income in our consolidated statements of comprehensive income. In addition to our investment in SoundCloud, Pandora has an agreement with SoundCloud to be its exclusive ad sales representative in the US and certain European countries. Through this arrangement, Pandora offers advertisers the ability to execute campaigns across the Pandora and SoundCloud platforms. We recorded revenue share expense related to this agreement of $ 54 , $ 55 and $ 60 for the years ended December 31, 2023, 2022 and 2021, respectively. We also had related party liabilities of $ 20 and $ 19 as of December 31, 2023 and December 31, 2022, respectively, related to this agreement. (13) Debt Our debt as of December 31, 2023 and December 31, 2022 consisted of the following: Principal Amount at Carrying value (a) at Issuer / Borrower Issued Debt Maturity Date Interest Payable December 31, 2023 December 31, 2023 December 31, 2022 Pandora (c) (d) June 2018 1.75 % Convertible Senior Notes December 1, 2023 semi-annually on June 1 and December 1 $ — $ — $ 193 Sirius XM (b) (f) April 2022 Incremental Term Loan April 11, 2024 variable fee paid monthly 500 500 500 Sirius XM (b) August 2021 3.125 % Senior Notes September 1, 2026 semi-annually on March 1 and September 1 1,000 994 992 Sirius XM (b) July 2017 5.00 % Senior Notes August 1, 2027 semi-annually on February 1 and August 1 1,500 1,494 1,492 Sirius XM (b) June 2021 4.00 % Senior Notes July 15, 2028 semi-annually on January 15 and July 15 2,000 1,985 1,982 Sirius XM (b) June 2019 5.500 % Senior Notes July 1, 2029 semi-annually on January 1 and July 1 1,250 1,241 1,240 Sirius XM (b) June 2020 4.125 % Senior Notes July 1, 2030 semi-annually on January 1 and July 1 1,500 1,488 1,487 Sirius XM (b) August 2021 3.875 % Senior Notes September 1, 2031 semi-annually on March 1 and September 1 1,500 1,487 1,485 Sirius XM (e) December 2012 Senior Secured Revolving Credit Facility (the "Credit Facility") August 31, 2026 variable fee paid quarterly — — 80 Sirius XM Various Finance leases Various n/a n/a 15 12 Total Debt 9,204 9,463 Less: total current maturities 505 196 Less: total deferred financing costs 9 11 Total long-term debt $ 8,690 $ 9,256 (a) The carrying value of the obligations is net of any remaining unamortized original issue discount. (b) All material domestic subsidiaries, including Pandora and its subsidiaries, that guarantee the Credit Facility have guaranteed the Incremental Term Loan and these notes. (c) Holdings unconditionally guaranteed all of the payment obligations of Pandora under these notes. (d) We acquired $ 193 in principal amount of the 1.75 % Convertible Senior Notes due 2023 as part of the acquisition of Pandora Media, Inc. in 2019. During the year ended December 31, 2023, certain investors exercised their right to require a Special Repurchase, as defined in the indenture governing such notes, and Pandora repurchased $ 173 in outstanding F-26 Table of Contents SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued (Dollars and shares in millions, except per share amounts) principal amount of the 1.75 % Convertible Senior Notes due 2023 with cash for an aggregate purchase price equal to 100 % of the principal amount of the notes repurchased plus accrued and unpaid interest to the date of repurchase. In December 2023, Pandora retired the remaining $ 20 of outstanding principal amount of the 1.75 % Convertible Senior Notes due 2023 at maturity with cash for 100 % of the principal amount plus accrued and unpaid interest to the date of maturity. (e) In August 2021, Sirius XM entered into an amendment to extend the maturity of the $ 1,750 Credit Facility to August 31, 2026. Sirius XM's obligations under the Credit Facility are guaranteed by its material domestic subsidiaries, including Pandora and its subsidiaries, and are secured by a lien on substantially all of Sirius XM's assets and the assets of its material domestic subsidiaries. From and after July 1, 2023, Sirius XM borrowings are based on the Secured Overnight Financing Rate (“SOFR”) plus an applicable rate based on its debt to operating cash flow ratio. Sirius XM is also required to pay a variable fee on the average daily unused portion of the Credit Facility which is payable on a quarterly basis. The variable rate for the unused portion of the Credit Facility was 0.25 % per annum as of December 31, 2023. All of Sirius XM's outstanding borrowings under the Credit Facility are classified as Long-term debt within our consolidated balance sheets due to the long-term maturity of this debt. (f) In April 2022, Sirius XM entered into an amendment to the Credit Facility to incorporate an Incremental Term Loan borrowing of $ 500 which matures on April 11, 2024. Interest on the Incremental Term Loan borrowing is based on SOFR plus an applicable rate. Retired Debt On August 2, 2021, Sirius XM redeemed $ 1,000 in outstanding principal amount of its 3.875 % Senior Notes due 2022 for an aggregate purchase price, including interest, of $ 1,019 . On August 16, 2021, Sirius XM redeemed $ 1,500 in outstanding principal amount of its 4.625 % Senior Notes due 2024 for an aggregate purchase price, including premium and interest, of $ 1,541 . On September 2, 2021, Sirius XM redeemed $ 1,000 in outstanding principal amount of its 5.375 % Senior Notes due 2026 for an aggregate purchase price, including premium and interest, of $ 1,034 . During the year ended December 31, 2021, we recognized $ 83 to Loss on extinguishment of debt, consisting primarily of redemption premiums of $ 62 , unamortized discount and unamortized deferred financing fees, as a result of these redemptions. Covenants and Restrictions Under the Credit Facility, Sirius XM, our wholly owned subsidiary, must comply with a debt maintenance covenant that it cannot exceed a total leverage ratio, calculated as consolidated total debt to consolidated operating cash flow, of 5.0 to 1.0. The Credit Facility generally requires compliance with certain covenants that restrict Sirius XM's ability to, among other things, (i) incur additional indebtedness, (ii) incur liens, (iii) pay dividends or make certain other restricted payments, investments or acquisitions, (iv) enter into certain transactions with affiliates, (v) merge or consolidate with another person, (vi) sell, assign, lease or otherwise dispose of all or substantially all of Sirius XM's assets, and (vii) make voluntary prepayments of certain debt, in each case subject to exceptions. The indentures governing Sirius XM's notes restrict Sirius XM's non-guarantor subsidiaries' ability to create, assume, incur or guarantee additional indebtedness without such non-guarantor subsidiary guaranteeing each such series of notes on a pari passu basis. The indentures governing the notes also contain covenants that, among other things, limit Sirius XM's ability and the ability of its subsidiaries to create certain liens; enter into sale/leaseback transactions; and merge or consolidate. Under Sirius XM's debt agreements, the following generally constitute an event of default: (i) a default in the payment of interest; (ii) a default in the payment of principal; (iii) failure to comply with covenants; (iv) failure to pay other indebtedness after final maturity or acceleration of other indebtedness exceeding a specified amount; (v) certain events of bankruptcy; (vi) a judgment for payment of money exceeding a specified aggregate amount; and (vii) voidance of subsidiary guarantees, subject to grace periods where applicable. If an event of default occurs and is continuing, our debt could become immediately due and payable. At December 31, 2023 and December 31, 2022, we were in compliance with our debt covenants. F-27 Table of Contents SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued (Dollars and shares in millions, except per share amounts) (14) Stockholders’ Equity Common Stock, par value $ 0.001 per share We are authorized to issue up to 9,000 shares of common stock. There were 3,843 and 3,891 shares of common stock issued and outstanding on December 31, 2023 and December 31, 2022, respectively. As of December 31, 2023, there were 211 shares of common stock reserved for issuance in connection with outstanding stock-based awards to members of our board of directors, employees and third parties. Quarterly Dividends During the year ended December 31, 2023, our board of directors declared and paid the following dividend: Declaration Date Dividend Per Share Record Date Total Amount Payment Date January 25, 2023 $ 0.0242 February 9, 2023 $ 94 February 24, 2023 April 19, 2023 $ 0.0242 May 5, 2023 $ 94 May 24, 2023 July 26, 2023 $ 0.0242 August 8, 2023 $ 93 August 30, 2023 October 25, 2023 $ 0.0266 November 7, 2023 $ 102 November 29, 2023 Stock Repurchase Program As of December 31, 2023, our board of directors had approved for repurchase an aggregate of $ 18,000 of our common stock. Our board of directors did not establish an end date for this stock repurchase program. Shares of common stock may be purchased from time to time on the open market, pursuant to pre-set trading plans meeting the requirements of Rule 10b5-1 under the Exchange Act, in privately negotiated transactions, including transactions with Liberty Media and its affiliates, or otherwise. As of December 31, 2023, our cumulative repurchases since December 2012 under our stock repurchase program totaled 3,731 shares for $ 16,834 , and $ 1,166 remained available for future share repurchases under our stock repurchase program. The following table summarizes our total share repurchase activity for the years ended: December 31, 2023 December 31, 2022 December 31, 2021 Share Repurchase Type Shares Amount Shares Amount Shares Amount Open Market Repurchases 69 $ 274 103 $ 639 245 $ 1,512 Preferred Stock, par value $ 0.001 per share We are authorized to issue up to 50 shares of undesignated preferred stock with a liquidation preference of $ 0.001 per share. There were no shares of preferred stock issued or outstanding as of December 31, 2023 and December 31, 2022. F-28 Table of Contents SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued (Dollars and shares in millions, except per share amounts) (15) Benefit Plans We recognized share-based payment expense of $ 184 , $ 197 and $ 202 for the years ended December 31, 2023, 2022 and 2021, respectively. We account for equity instruments granted in accordance with ASC 718, Compensation - Stock Compensation . ASC 718 requires all share-based compensation payments to be recognized in the financial statements based on fair value. We use the Black-Scholes-Merton option-pricing model to value stock option awards, and have elected to treat awards with graded vesting as a single award. Share-based compensation expense is recognized ratably over the requisite service period, which is generally the vesting period. We measure restricted stock unit awards using the fair market value of the restricted shares of common stock on the day the award is granted. We measure the value of restricted units that will vest depending a relative total stockholder return metric – that is, the performance of our common stock as compared other companies included in the S&P 500 Index – using a special option-based valuation method, known as a Monte Carlo simulation. Since the results of such awards depend on future results, which are not known on the grant date, the Monte Carlo simulation attempts to take into consideration the terms of the awards, potential future returns, payout rates, and other factors to estimate a fair value of the award. The Monte Carlo simulation method uses factual data for the company and employs various assumptions. Stock-based awards granted to employees, non-employees and members of our board of directors include stock options and restricted stock units. Fair value as determined using the Black-Scholes-Merton model varies based on assumptions used for the expected life, expected stock price volatility, expected dividend yield and risk-free interest rates. For the years ended December 31, 2023, 2022, and 2021, we estimated the fair value of awards granted using the hybrid approach for volatility, which weights observable historical volatility and implied volatility of qualifying actively traded options on our common stock. The expected life assumption represents the weighted-average period stock-based awards are expected to remain outstanding. These expected life assumptions are established through a review of historical exercise behavior of stock-based award grants with similar vesting periods. Where historical patterns do not exist for non-employees, contractual terms are used. Dividend yield is based on the current expected annual dividend per share and our stock price. The risk-free interest rate represents the daily treasury yield curve rate at the grant date based on the closing market bid yields on actively traded U.S. treasury securities in the over-the-counter market for the expected term. Our assumptions may change in future periods. 2015 Long-Term Stock Incentive Plan In May 2015, our stockholders approved the Sirius XM Holdings Inc. 2015 Long-Term Stock Incentive Plan (the “2015 Plan”). Employees, consultants and members of our board of directors are eligible to receive awards under the 2015 Plan. The 2015 Plan provides for the grant of stock options, restricted stock awards, restricted stock units and other stock-based awards that the Compensation Committee of our Board of Directors deems appropriate. Stock-based awards granted under the 2015 Plan are generally subject to a graded vesting requirement, which is generally three to four years from the grant date. Stock options generally expire ten years from the date of grant. Restricted stock units include performance-based restricted stock units (“PRSUs”), the vesting of which are subject to the achievement of performance goals and the employee's continued employment and generally cliff vest on the third anniversary of the grant date. Each restricted stock unit entitles the holder to receive one share of common stock upon vesting. As of December 31, 2023, 106 shares of common stock were available for future grants under the 2015 Plan. The Compensation Committee intends to award equity-based compensation to our senior management in the form of: stock options, restricted stock units, PRSUs, which will cliff vest after a performance period target established by the Compensation Committee is achieved, and PRSUs, which will cliff vest after a performance period based on the performance of our common stock relative to the companies included in the S&P 500 Index, which we refer to as a relative “TSR” or “total stockholder return” metric. TSRs based on the relative total stockholder return metric will only vest if our performance achieves at least the 25th percentile, with a target payout requiring performance at the 50th percentile. The settlement of PRSUs earned in respect of the applicable performance period will be generally subject to the executive’s continued employment with us through the date the total stockholder return performance is certified by the Compensation Committee. Other Plans We maintain six share-based benefit plans in addition to the 2015 Plan — the Sirius XM Radio Inc. 2009 Long-Term Stock Incentive Plan, the Amended and Restated Sirius Satellite Radio 2003 Long-Term Stock Incentive Plan, the 2014 Stock Incentive Plan of AdsWizz Inc., the Pandora Media, Inc. 2011 Equity Incentive Plan, the Pandora Media, Inc. 2004 Stock Plan F-29 Table of Contents SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued (Dollars and shares in millions, except per share amounts) and the TheSavageBeast.com, Inc. 2000 Stock Incentive Plan. Excluding dividend equivalent units granted as a result of a declared dividend, no further awards may be made under these plans. The following table summarizes the weighted-average assumptions used to compute the fair value of options granted to employees, members of our board of directors and non-employees: For the Years Ended December 31, 2023 2022 2021 Risk-free interest rate 4.0 % 2.0 % 0.6 % Expected life of options — years 3.8 3.40 6.06 Expected stock price volatility 32 % 31 % 33 % Expected dividend yield 2.0 % 1.3 % 1.0 % The following table summarizes stock option activity under our share-based plans for the years ended December 31, 2023, 2022 and 2021: Options Weighted-Average Exercise Price Per Share Weighted-Average Remaining Contractual Term (Years) Aggregate Intrinsic Value Outstanding at the beginning of January 1, 2021 184 $ 4.73 Granted 54 $ 6.14 Exercised ( 72 ) $ 3.98 Forfeited, cancelled or expired ( 5 ) $ 6.73 Outstanding as of December 31, 2021 161 $ 5.47 Granted 11 $ 6.46 Exercised ( 35 ) $ 4.31 Forfeited, cancelled or expired ( 3 ) $ 6.52 Outstanding as of December 31, 2022 134 $ 5.55 Granted 9 $ 4.92 Exercised ( 12 ) $ 4.33 Forfeited, cancelled or expired ( 9 ) $ 5.91 Outstanding as of December 31, 2023 122 $ 5.60 4.88 $ 40 Exercisable as of December 31, 2023 80 $ 5.50 4.29 $ 36 The weighted average grant date fair value per stock option granted during the years ended December 31, 2023, 2022 and 2021 was $ 1.23 , $ 1.48 and $ 1.77 , respectively. The total intrinsic value of stock options exercised during the years ended December 31, 2023, 2022 and 2021 was $ 15 , $ 77 and $ 170 , respectively. During the years ended December 31, 2023, 2022 and 2021 the number of net settled shares issued as a result of stock option exercises was 2 , 8 and 22 , respectively. We recognized share-based payment expense associated with stock options of $ 30 , $ 35 and $ 42 for each of the years ended December 31, 2023, 2022 and 2021, respectively. F-30 Table of Contents SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued (Dollars and shares in millions, except per share amounts) The following table summarizes the restricted stock unit, including PRSU, activity under our share-based plans for the years ended December 31, 2023, 2022 and 2021: Shares Grant Date Fair Value Per Share Nonvested at the beginning of January 1, 2021 75 $ 6.06 Granted 40 $ 6.35 Vested ( 26 ) $ 6.02 Forfeited ( 9 ) $ 6.11 Nonvested as of December 31, 2021 80 $ 6.22 Granted 46 $ 6.55 Vested ( 32 ) $ 6.18 Forfeited ( 9 ) $ 6.36 Nonvested as of December 31, 2022 85 $ 6.38 Granted 47 $ 4.72 Vested ( 31 ) $ 6.39 Forfeited ( 12 ) $ 6.15 Nonvested as of December 31, 2023 89 $ 5.59 The total intrinsic value of restricted stock units, including PRSUs, vesting during the years ended December 31, 2023, 2022 and 2021 was $ 147 , $ 207 and $ 166 , respectively. During the years ended December 31, 2023, 2022 and 2021 the number of net settled shares issued as a result of restricted stock units vesting totaled 19 , 19 and 16 , respectively. During the years ended December 31, 2023, 2022 and 2021 we granted 4 , 6 and 7 PRSUs to certain employees, respectively. We believe it is probable that the performance target applicable to these PRSUs will be achieved. In connection with the cash dividends paid during the years ended December 31, 2023, 2022 and 2021 we granted 1 , 4 and 1 , respectively, restricted stock units, including PRSUs, in accordance with the terms of existing award agreements. These grants did not result in any additional incremental share-based payment expense being recognized during the years ended December 31, 2023, 2022 and 2021. We recognized share-based payment expense associated with restricted stock units, including PRSUs, of $ 154 , $ 162 and $ 160 for the years ended December 31, 2023, 2022 and 2021, respectively. Total unrecognized compensation costs related to unvested share-based payment awards for stock options and restricted stock units, including PRSUs, granted to employees, members of our board of directors and third parties at December 31, 2023 and December 31, 2022 was $ 423 and $ 472 , respectively. The total unrecognized compensation costs at December 31, 2023 are expected to be recognized over a weighted-average period of 2.6 years. 401(k) Savings Plans Sirius XM sponsors the Sirius XM Radio Inc. 401(k) Savings Plan (the “Sirius XM Plan”) for eligible employees. The Sirius XM Plan allows eligible employees to voluntarily contribute from 1 % to 50 % of their pre-tax eligible earnings, subject to certain defined limits. We match 50 % of an employee’s voluntary contributions per pay period on the first 6 % of an employee’s pre-tax salary up to a maximum of 3 % of eligible compensation. We may also make additional discretionary matching, true-up matching and non-elective contributions to the Sirius XM Plan. Employer matching contributions under the Sirius XM Plan vest at a rate of 33.33 % for each year of employment and are fully vested after three years of employment for all current and future contributions. Our cash employer matching contributions are not used to purchase shares of our common stock on the open market, unless the employee elects our common stock as their investment option for this contribution. We recognized expenses of $ 20 , $ 19 and $ 21 for the years ended December 31, 2023, 2022 and 2021, respectively, in connection with the Sirius XM Plan. F-31 Table of Contents SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued (Dollars and shares in millions, except per share amounts) Sirius XM Holdings Inc. Deferred Compensation Plan The Sirius XM Holdings Inc. Deferred Compensation Plan (the “DCP”) allows members of our board of directors and certain eligible employees to defer all or a portion of their base salary, cash incentive compensation and/or board of directors’ cash compensation, as applicable. Pursuant to the terms of the DCP, we may elect to make additional contributions beyond amounts deferred by participants, but we are under no obligation to do so. We have established a grantor (or “rabbi”) trust to facilitate the payment of our obligations under the DCP. Contributions to the DCP, net of withdrawals, were $( 3 ), $( 1 ) and $ 4 for the years ended December 31, 2023, 2022 and 2021, respectively. As of December 31, 2023 and December 31, 2022, the fair value of the investments held in the trust were $ 53 and $ 47 , respectively, which is included in Other long-term assets in our consolidated balance sheets and classified as trading securities. Trading gains and losses associated with these investments are recorded in Other (expense) income within our consolidated statements of comprehensive income. The associated liability is recorded within Other long-term liabilities in our consolidated balance sheets, and any increase or decrease in the liability is recorded in General and administrative expense within our consolidated statements of comprehensive income. We recorded gains (losses) on investments held in the trust of $ 7 , $( 10 ) and $ 5 for the years ended December 31, 2023, 2022 and 2021, respectively. (16) Commitments and Contingencies The following table summarizes our expected contractual cash commitments as of December 31, 2023: 2024 2025 2026 2027 2028 Thereafter Total Debt obligations $ 505 $ 6 $ 1,004 $ 1,500 $ 2,000 $ 4,250 $ 9,265 Cash interest payments 390 380 378 344 269 367 2,128 Satellite and transmission 292 203 91 40 — — 626 Programming and content 447 358 242 151 79 63 1,340 Sales and marketing 96 27 18 6 — — 147 Satellite incentive payments 8 8 3 3 3 12 37 Operating lease obligations 56 51 47 39 29 49 271 Royalties, minimum guarantees and other 407 305 84 23 9 1 829 Total (1) $ 2,201 $ 1,338 $ 1,867 $ 2,106 $ 2,389 $ 4,742 $ 14,643 (1) The table does not include our reserve for uncertain tax positions, which at December 31, 2023 totaled $ 50 . Debt obligations. Debt obligations include principal payments on outstanding debt and finance lease obligations. Cash interest payments. Cash interest payments include interest due on outstanding debt and capital lease payments through maturity. Satellite and transmission. We have entered into agreements for the design, construction and launch of four additional satellites, SXM-9, SXM-10, SXM-11 and SXM-12. We also have entered into agreements with third parties to operate and maintain satellite telemetry, tracking and control facilities and certain components of our terrestrial repeater networks. Programming and content. We have entered into various programming and content agreements. Under the terms of these agreements, our obligations include fixed payments, advertising commitments and revenue sharing arrangements. In certain of these agreements, the future revenue sharing costs are dependent upon many factors and are difficult to estimate; therefore, they are not included in our minimum contractual cash commitments. Sales and marketing. We have entered into various marketing, sponsorship and distribution agreements to promote our brands and are obligated to make payments to sponsors, retailers, automakers, radio manufacturers and other third parties under these agreements. Certain programming and content agreements also require us to purchase advertising on properties owned or controlled by the licensors. F-32 Table of Contents SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued (Dollars and shares in millions, except per share amounts) Satellite incentive payments. Maxar Technologies (formerly Space Systems/Loral), the manufacturer of certain of our in-orbit satellites, may be entitled to future in-orbit performance payments upon XM-5, SIRIUS FM-5, SIRIUS FM-6, and SXM-8 meeting their fifteen-year design life, which we expect to occur. Operating lease obligations. We have entered into both cancelable and non-cancelable operating leases for office space, terrestrial repeaters, data centers and equipment. 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 have options to renew. Total rent recognized in connection with leases for the years ended December 31, 2023, 2022 and 2021 was $ 64 , $ 68 and $ 69 , respectively. Royalties, Minimum Guarantees and Other. We have entered into music royalty arrangements that include fixed payments. In addition, certain of our podcast agreements also contain minimum guarantees. As of December 31, 2023, we had future fixed commitments related to music royalty and podcast agreements of $ 581 , of which $ 265 will be paid in 2024 and the remainder will be paid thereafter. On a quarterly basis, we record the greater of the cumulative actual content costs incurred or the cumulative minimum guarantee based on forecasts for the minimum guarantee period. The minimum guarantee period is the period of time that the minimum guarantee relates to, as specified in each agreement, which may be annual or a longer period. The cumulative minimum guarantee, based on forecasts, considers factors such as listening hours, downloads, revenue, subscribers and other terms of each agreement that impact our expected attainment or recoupment of the minimum guarantees based on the relative attribution method. Several of our content agreements also include provisions related to the royalty payments and structures of those agreements relative to other content licensing arrangements, which, if triggered, cause our payments under those agreements to escalate. In addition, record labels, publishers and performing rights organizations with whom we have entered into direct license agreements have the right to audit our content payments, and such audits often result in disputes over whether we have paid the proper content costs. We have also 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 other variable cost arrangements. These future costs are dependent upon many factors 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 or party to various claims and lawsuits, including those discussed below. We record a liability when we believe that it is both probable that a liability will be incurred, and the amount of loss can be reasonably estimated. We evaluate developments in legal matters that could affect the amount of liability that has been previously accrued and make adjustments as appropriate. Significant judgment is required to determine both probability and the estimated amount of a loss or potential loss. We may be unable to reasonably estimate the reasonably possible loss or range of loss for a particular legal contingency for various reasons, including, among others, because: (i) the damages sought are indeterminate; (ii) the proceedings are in the relative early stages; (iii) there is uncertainty as to the outcome of pending proceedings (including motions and appeals); (iv) there is uncertainty as to the likelihood of settlement and the outcome of any negotiations with respect thereto; (v) there remain significant factual issues to be determined or resolved; (vi) the relevant law is unsettled; or (vii) the proceedings involve novel or untested legal theories. In such instances, there may be considerable uncertainty regarding the ultimate resolution of such matters, including the likelihood or magnitude of a possible eventual loss, if any. New York State v. Sirius XM Radio Inc. On December 20, 2023, the People of the State of New York, by Letitia James, Attorney General of the State of New York (the “NY AG”), filed a Petition in the Supreme Court of the State of New York, New York County, against us. The Petition alleges various violations of New York law and the federal Restore Online F-33 Table of Contents SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued (Dollars and shares in millions, except per share amounts) Shoppers’ Confidence Act (“ROSCA”) arising out of our subscription cancellation practices. The Petition is the product of a subpoena that the NY AG issued in December 2021 seeking documents relating to our subscription cancellation practices and the related investigation. In general, the Petition alleges that we require consumers to devote an excessive amount of time to cancel subscriptions and have not implemented cancellation processes that are simple and efficient. The Petition claims to be brought under certain provisions of New York law that authorize the NY AG to initiate special proceedings seeking injunctive and other equitable relief in cases of persistent business fraud or illegality. The Petition seeks: a permanent injunction from us violating provisions of New York law and ROSCA arising out of the alleged fraudulent, deceptive and illegal practices associated with our subscription cancellation procedures; an accounting of each consumer who cancelled, or sought to cancel, a satellite radio subscription, including the duration of the cancel interaction and the funds collected from such consumers after that interaction; monetary restitution and damages to aggrieved consumers; disgorgement of all profits resulting from the alleged illegal, deceptive and fraudulent acts; civil penalties; and the NY AG’s costs. In January 2024, Sirius XM filed to remove this action to the United States District Court for the Southern District of New York. The NY AG has informed the court that it intends to oppose the removal and seek a remand to the Supreme Court of the State of New York. We believe we have substantial defenses to the claims asserted in this action, and we intend to defend this action vigorously. U.S. Music Royalty Fee Actions and Mass Arbitrations . A number of class actions and mass arbitrations have been commenced against us relating to our pricing, billing and subscription marketing practices. Although each class action and mass arbitration contains unique allegations; in general, the actions and arbitrations allege that we falsely advertised our music subscription plans at lower prices than we actually charge, that we allegedly did not disclose our “U.S. Music Royalty Fee”, and that we have taken other actions to prevent customers from discovering the existence, amount and nature of the U.S. Music Royalty Fee in violation of various state consumer protection laws. The plaintiffs and claimants seek to enjoin us from advertising our music subscription plans without specifically disclosing the existence and amount of the U.S. Music Royalty Fee. The plaintiffs and claimants also seek disgorgement, restitution and/or damages in the aggregate amount of U.S Music Royalty Fees paid by customers, as well as statutory and punitive damages where available. To date, the actions and arbitrations filed against us include: • On April 14, 2023, Ayana Stevenson and David Ambrose, individually, as private attorneys general, and on behalf of all other California persons similarly situated, filed a class action complaint against Sirius XM in the Superior Court of the State of California, County of Contra Costa. The case was removed to the United States District Court for the Northern District of California which compelled arbitration of all claims on November 9, 2023. • On May 17, 2023, Robyn Posternock, Muriel Salters and Philip Munning, individually, as private attorneys general, and on behalf of all other New Jersey persons similarly situated, filed a class action complaint against Sirius XM in the United States District Court for the District of New Jersey. Ms. Salters and Mr. Munning have since withdrawn their claims and a motion to compel arbitration with Ms. Posternock has been fully briefed. • On June 5, 2023, Christopher Carovillano and Steven Brandt, individually, as private attorneys general, and on behalf of all other United States persons similarly situated (excluding persons in the states of California, New Jersey and Washington), filed a class action complaint against Sirius XM in the United States District Court for the Southern District of New York. A motion to dismiss that complaint has been fully briefed. • Commencing on June 5, 2023, the law firm of Hattis & Lukacs filed a series of mass arbitration claims against Sirius XM before the American Arbitration Association (the “AAA”), they currently purport to act on behalf of approximately 23,000 claimants. Currently, only claims for approximately 1,425 claimants in California and New Jersey remain pending before the AAA. The AAA has declined to administer the other claims. • Other law firms have since threatened mass arbitration claims against Sirius XM before the AAA on behalf of approximately 28,000 additional claimants, many of which have added potential causes of action under the Electronic Funds Transfer Act. F-34 Table of Contents SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued (Dollars and shares in millions, except per share amounts) We believe we have substantial defenses to the claims asserted in these actions and arbitrations, and we intend to defend these actions vigorously. Other Matters . In the ordinary course of business, we are a defendant in various other lawsuits and arbitration proceedings, including derivative actions; actions filed by subscribers, both on behalf of themselves and on a class action basis; former employees; parties to contracts or leases; and owners of patents, trademarks, copyrights or other intellectual property. None of these other matters, in our opinion, is likely to have a material adverse effect on our business, financial condition or results of operations. (17) Income Taxes Current federal income tax expense or benefit represents the amounts expected to be reported on our income tax return, and deferred income tax expense or benefit represents the change in net deferred tax assets and liabilities. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities as measured by the enacted income tax rates that will be in effect when these differences reverse. The current state income tax provision is primarily related to taxable income in certain states that have suspended or limited the ability to use net operating loss carryforwards or where net operating losses have been fully utilized. Income tax expense is the sum of current income tax plus the change in deferred tax assets and liabilities. We have historically filed a consolidated federal income tax return for all of our wholly owned subsidiaries, including Sirius XM and Pandora. On February 1, 2021, we entered into a tax sharing agreement with Liberty Media governing the allocation of consolidated U.S. income tax liabilities and setting forth agreements with respect to other tax matters. The tax sharing agreement contains provisions that we believe are customary for tax sharing agreements between members of a consolidated group. On November 3, 2021, Liberty Media informed us that it beneficially owned over 80% of the outstanding shares of our common stock, resulting in our inclusion in the 2021 consolidated tax return of Liberty Media. The tax sharing agreement and our inclusion in Liberty Media’s consolidated tax group is not expected to have any material adverse effect on us. We have calculated the provision for income taxes by using a separate return method. Our current tax expense is the amount of tax payable on the basis of a hypothetical, current-year separate return. We provided deferred taxes on temporary differences and on any carryforwards that we could claim on our hypothetical return and assess the need for a valuation allowance on the basis of our projected separate return results. Any difference between the tax expense (or benefit) allocated to us under the separate return method and payments to be made to (or received from) Liberty Media for tax expense are treated as either dividends or capital contributions. Income tax expense consisted of the following: For the Years Ended December 31, 2023 2022 2021 Current taxes: Federal $ ( 300 ) $ ( 140 ) $ ( 31 ) State ( 24 ) ( 50 ) ( 50 ) Total current taxes ( 324 ) ( 190 ) ( 81 ) Deferred taxes: Federal 57 ( 163 ) ( 210 ) State 7 ( 39 ) 79 Total deferred taxes 64 ( 202 ) ( 131 ) Total income tax expense $ ( 260 ) $ ( 392 ) $ ( 212 ) F-35 Table of Contents SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued (Dollars and shares in millions, except per share amounts) The following table presents a reconciliation of the U.S. federal statutory tax rate and our effective tax rate: For the Years Ended December 31, 2023 2022 2021 Federal tax expense, at statutory rate 21.0 % 21.0 % 21.0 % State income tax expense, net of federal benefit 4.1 % 4.1 % 4.1 % Change in valuation allowance ( 1.7 ) % 2.2 % 1.5 % Tax credits ( 7.5 ) % ( 1.5 ) % ( 4.7 ) % Share-based compensation 0.8 % ( 0.8 ) % ( 1.0 ) % Impact of nondeductible compensation 0.7 % 0.8 % 0.6 % Uncertain tax positions 0.4 % ( 0.8 ) % ( 0.1 ) % Audit Settlements — % — % ( 7.6 ) % Other, net ( 0.7 ) % ( 0.6 ) % 0.1 % Effective tax rate 17.1 % 24.4 % 13.9 % Our effective tax rate of 17.1 % for the year ended December 31, 2023 was primarily driven by federal and state income tax expense, partially offset by the benefits related to research and development and certain other credits, as well as a release in state valuation allowance. Our effective tax rate of 24.4 % for the year ended December 31, 2022 was primarily impacted by federal and state income tax expense as well as changes in state valuation allowance, partially offset by a benefit related to research and development and certain other credits. Our effective tax rate of 13.9 % for the year ended December 31, 2021 was primarily impacted by federal and state income tax expense, partially offset by settlements with various states as well as a benefit related to research and development and certain other credits. Deferred income taxes are recognized for the tax consequences related to temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for tax purposes at each year-end, based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences can be carried forward under tax law. Our evaluation of the realizability of deferred tax assets considers both positive and negative evidence, including historical financial performance, scheduled reversal of deferred tax assets and liabilities, projected taxable income and tax planning strategies. The weight given to the potential effects of positive and negative evidence is based on the extent to which it can be objectively verified. A valuation allowance is recognized when, based on the weight of all available evidence, it is considered more likely than not that all, or some portion, of the deferred tax assets will not be realized. F-36 Table of Contents SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued (Dollars and shares in millions, except per share amounts) The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities, shown before jurisdictional netting, are presented below: For the Years Ended December 31, 2023 2022 Deferred tax assets: Net operating loss carryforwards and tax credits $ 361 $ 405 Deferred revenue 42 45 Accrued bonus 28 28 Expensed costs capitalized for tax 66 66 Investments 18 23 Stock based compensation 51 54 Operating lease liability 85 94 Other 26 17 Total deferred tax assets 677 732 Deferred tax liabilities: Depreciation of property and equipment ( 149 ) ( 206 ) FCC license ( 521 ) ( 520 ) Other intangible assets ( 204 ) ( 234 ) Right of use asset ( 68 ) ( 77 ) Other ( 1 ) — Total deferred tax liabilities ( 943 ) ( 1,037 ) Net deferred tax assets before valuation allowance ( 266 ) ( 305 ) Valuation allowance ( 88 ) ( 113 ) Total net deferred tax (liability) asset $ ( 354 ) $ ( 418 ) Net operating loss carryforwards and tax credits decreased as a result of the utilization of net operating losses related to current year taxable income. As of December 31, 2023, our gross federal net operating loss carryforwards were approximately $ 284 which are subject to Section 382 limitations. As of December 31, 2023 and 2022, we had a valuation allowance related to deferred tax assets of $ 88 and $ 113 , respectively, that were not likely to be realized due to the timing of certain federal and state net operating loss limitations. During the year ended December 31, 2023, our valuation allowance decreased primarily as a result of the impact of an increase in forecasted earnings, resulting in higher projected utilization of net operating losses. ASC 740, Income Taxes , requires a company to first determine whether it is more likely than not that a tax position will be sustained based on its technical merits as of the reporting date, assuming that taxing authorities will examine the position and have full knowledge of all relevant information. A tax position that meets this more likely than not threshold is then measured and recognized at the largest amount of benefit that is greater than fifty percent likely to be realized upon effective settlement with a taxing authority. If the tax position is not more likely than not to be sustained, the gross amount of the unrecognized tax position will not be recorded in the financial statements but will be shown in tabular format within the uncertain income tax positions. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs due to the following conditions: (1) the tax position is “more likely than not” to be sustained, (2) the tax position, amount, and/or timing is ultimately settled through negotiation or litigation, or (3) the statute of limitations for the tax position has expired. A number of years may elapse before an uncertain tax position is effectively settled or until there is a lapse in the applicable statute of limitations. We record interest and penalties related to uncertain tax positions in Income tax expense in our consolidated statements of comprehensive income. As of December 31, 2023 and 2022, we had unrecognized tax benefits and uncertain tax positions of $ 171 and $ 198 , respectively. If recognized, $ 171 of unrecognized tax benefits would affect our effective tax rate. Uncertain tax positions are F-37 Table of Contents SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued (Dollars and shares in millions, except per share amounts) recognized in Other long-term liabilities which, as of December 31, 2023 and 2022 were $ 50 and $ 81 , respectively, including accrued interest. We have state income tax audits pending. We do not expect the ultimate outcome of these audits to have a material adverse effect on our financial position or results of operations. We also do not currently anticipate that our existing reserves related to uncertain tax positions as of December 31, 2023 will significantly increase or decrease during the year ending December 31, 2024. Various events could cause our current expectations to change. Should our position with respect to the majority of these uncertain tax positions be upheld, the effect would be recorded in our consolidated statements of comprehensive income as part of the income tax provision. We recorded interest expense of $ 2 and $( 3 ) for the years ended December 31, 2023 and 2022, respectively, related to unrecognized tax benefits. Changes in our unrecognized tax benefits and uncertain tax positions from January 1 through December 31 are set forth below: 2023 2022 Balance, beginning of year $ 198 $ 179 Increases in tax positions for prior years 4 3 Increases in tax positions for current year 32 31 Decreases in tax positions for prior years ( 2 ) ( 15 ) Decreases in tax positions for current years ( 3 ) — Decreases related to settlement with taxing authorities ( 58 ) — Balance, end of year $ 171 $ 198 As part of our ESG strategies, w e have made, and expect to make, certain tax-efficient investments in clean energy technologies. These include investments in entities that own projects and technologies related to industrial carbon capture and storage. These investments will produce tax credits under Section 45Q of the Internal Revenue Code and related tax losses. On August 16, 2022, the Inflation Reduction Act of 2022, or IRA, was signed into law. Among other things, the IRA imposes a 15% corporate alternative minimum tax for tax years beginning after December 31, 2022, levies a 1% excise tax on net stock repurchases after December 31, 2022, and provides tax incentives to promote clean energy. Beginning in 2023, our net stock repurchases were subject to the excise tax. Based on the historical net repurchase activity, the excise tax and the other provisions of the IRA are not expected to have a material impact on our results of operations or financial position. (18) Segments and Geographic Information In accordance with FASB ASC Topic 280, Segment Reporting , we disaggregate our operations into two reportable segments: Sirius XM and Pandora and Off-platform. The financial results of these segments are utilized by the chief operating decision maker, who is our Chief Executive Officer, for evaluating segment performance and allocating resources. We report our segment information based on the "management" approach. The management approach designates the internal reporting used by management for making decisions and assessing performance as the source of our reportable segments. For additional information on our segments refer to Note 1. Segment results include the revenues and cost of services which are directly attributable to each segment. There are no indirect revenues or costs incurred that are allocated to the segments. There are planned intersegment advertising campaigns which will be eliminated. We had $ 3 of intersegment advertising revenue during the year ended December 31, 2023 and less than $ 1 of intersegment advertising revenue during each of the years ended December 31, 2022 and 2021. F-38 Table of Contents SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued (Dollars and shares in millions, except per share amounts) Segment revenue and gross profit were as follows during the periods presented: For the Year Ended December 31, 2023 Sirius XM Pandora and Off-platform Total Revenue Subscriber revenue $ 6,342 $ 524 $ 6,866 Advertising revenue 169 1,589 1,758 Equipment revenue 193 — 193 Other revenue 136 — 136 Total revenue 6,840 2,113 8,953 Cost of services (a) ( 2,689 ) ( 1,475 ) ( 4,164 ) Segment gross profit $ 4,151 $ 638 $ 4,789 The reconciliation between reportable segment gross profit to consolidated income before income tax is as follows: For the Year Ended December 31, 2023 Segment Gross Profit $ 4,789 Subscriber acquisition costs ( 359 ) Sales and marketing (a) ( 886 ) Engineering, design and development (a) ( 276 ) General and administrative (a) ( 502 ) Depreciation and amortization ( 554 ) Share-based payment expense ( 184 ) Impairment, restructuring and acquisition costs ( 82 ) Total other (expense) income ( 428 ) Consolidated income before income taxes $ 1,518 (a) Share-based payment expense of $ 45 related to cost of services, $ 45 related to sales and marketing, $ 46 related to engineering, design and development and $ 48 related to general and administrative has been excluded for the year ended December 31, 2023. For the Year Ended December 31, 2022 Sirius XM Pandora and Off-platform Total Revenue Subscriber revenue $ 6,370 $ 522 $ 6,892 Advertising revenue 196 1,576 1,772 Equipment revenue 189 — 189 Other revenue 150 — 150 Total revenue 6,905 2,098 9,003 Cost of services (b) ( 2,641 ) ( 1,443 ) ( 4,084 ) Segment gross profit $ 4,264 $ 655 $ 4,919 F-39 Table of Contents SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued (Dollars and shares in millions, except per share amounts) The reconciliation between reportable segment gross profit to consolidated income before income tax is as follows: For the Year Ended December 31, 2022 Segment Gross Profit $ 4,919 Subscriber acquisition costs ( 352 ) Sales and marketing (b) ( 1,023 ) Engineering, design and development (b) ( 246 ) General and administrative (b) ( 465 ) Depreciation and amortization ( 536 ) Share-based payment expense ( 197 ) Impairment, restructuring and acquisition costs ( 64 ) Total other (expense) income ( 431 ) Consolidated income before income taxes $ 1,605 (b) Share-based payment expense of $ 46 related to cost of services, $ 52 related to sales and marketing, $ 39 related to engineering, design and development and $ 60 related to general and administrative has been excluded for the year ended December 31, 2022. For the Year Ended December 31, 2021 Sirius XM Pandora and Off-platform Total Revenue Subscriber revenue $ 6,084 $ 530 $ 6,614 Advertising revenue 188 1,542 1,730 Equipment revenue 201 — 201 Other revenue 151 — 151 Total revenue 6,624 2,072 8,696 Cost of services (c) ( 2,594 ) ( 1,329 ) ( 3,923 ) Segment gross profit $ 4,030 $ 743 $ 4,773 The reconciliation between reportable segment gross profit to consolidated income before income tax is as follows: For the Year Ended December 31, 2021 Segment Gross Profit $ 4,773 Subscriber acquisition costs ( 325 ) Sales and marketing (c) ( 998 ) Engineering, design and development (c) ( 229 ) General and administrative (c) ( 451 ) Depreciation and amortization ( 533 ) Share-based payment expense ( 202 ) Impairment, restructuring and acquisition costs ( 20 ) Total other (expense) income ( 489 ) Consolidated income before income taxes $ 1,526 (c) Share-based payment expense of $ 45 related to cost of services, $ 58 related to sales and marketing, $ 36 related to engineering, design and development and $ 63 related to general and administrative has been excluded for the year ended December 31, 2021. F-40 Table of Contents SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued (Dollars and shares in millions, except per share amounts) A measure of segment assets is not currently provided to the Chief Executive Officer and has therefore not been provided. As of December 31, 2023, long-lived assets were predominantly located in the United States. No individual foreign country represented a material portion of our consolidated revenue during the year ended December 31, 2023. (19) Subsequent Events Capital Return Program On January 24, 2024, our board of directors declared a quarterly dividend on our common stock in the amount of $ 0.0266 per share of common stock payable on February 23, 2024 to stockholders of record as of the close of business on February 9, 2024. Credit Facility Modification On January 26, 2024, Sirius XM entered into an amendment (“Amendment No. 9”) to its existing Credit Facility. Prior to Amendment No. 9, the Credit Facility consisted of a (i) $ 1,750 senior secured revolving credit facility, from which Sirius XM could borrow and reborrow from time to time and (ii) a $ 500 incremental term loan, borrowings from each of which Sirius XM could use for working capital and other general corporate purchases, including share repurchases, dividends and the financing of acquisitions. Amendment No. 9 provides for certain changes to the Credit Agreement, including the addition of a $ 1,100 incremental term loan. F-41 Table of Contents SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES Schedule II - Schedule of Valuation and Qualifying Accounts (in millions) Description Balance January 1, Charged to Expenses Write-offs/ Payments/ Other Balance December 31, 2023 Allowance for doubtful accounts $ 11 59 ( 55 ) $ 15 Deferred tax assets—valuation allowance $ 113 — ( 25 ) $ 88 2022 Allowance for doubtful accounts $ 10 59 ( 58 ) $ 11 Deferred tax assets—valuation allowance $ 83 35 ( 5 ) $ 113 2021 Allowance for doubtful accounts $ 15 53 ( 58 ) $ 10 Deferred tax assets—valuation allowance $ 54 29 — $ 83 F-42