Pursuant to the requirements of the Securities Exchange Act of 1934, the Plan Administrator has duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.
Page ---- Part I - Financial Statements Report of Independent Public Accountants 1 Statements of Net Assets Available for Benefits as of December 31, 1999 and 1998 2 Statement of Changes in Net Assets Available for Benefits for the Year Ended December 31, 1999 3 Notes to Financial Statements 4 Part II - Supplemental Schedules Schedule of Assets Held for Investment Purposes as of December 31, 1999 9 Schedule of Reportable Transactions for the Year Ended December 31, 1999 10 Signatures 11 Exhibit 23.1 - Consent of Independent Public Accounts 12
To the Plan Administrator of the Sirius Satellite Radio 401(k) Savings Plan (formerly the CD Radio 401(k) Savings Plan):
We have audited the accompanying statements of net assets available for benefits of the Sirius Satellite Radio 401(k) Savings Plan (formerly the CD Radio 401(k) Savings Plan), as of December 31, 1999 and 1998, and the related statement of changes in net assets available for benefits for the year ended December 31, 1999. These financial statements and the schedules referred to below are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the principles used and the significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 1999 and 1998, and the changes in its net assets available for benefits for the year ended December 31, 1999, in conformity with accounting principles generally accepted in the United States.
Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedules of assets held for investment purposes and reportable transactions are presented for purposes of additional analysis and are not a required part of the basic financial statements but are supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplemental schedules have been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole.
New York, New York
June 22, 2000
1999 1998 ---- ---- Investments, at market value (See Notes 6 & 7) $2,124,061 $326,884 Employer Contribution Receivable 14,210 9,227 Employee Contribution Receivable 17,492 12,526 ---------- -------- Net Assets Available for Benefits $2,155,763 $348,637 ========== ========
The accompanying notes are an integral part of these statements.
ADDITIONS: Investment income: Net appreciation in fair value of investments (See Notes 6 & 7) $ 550,364 Interest & dividends 26,855 Contributions: Employer 453,137 Employee 801,989 ---------- Total additions $1,832,345 DEDUCTIONS: Distributions (25,219) ---------- Net increase in assets available for benefits 1,807,126 Net assets available for benefits: Beginning of year 348,637 ========== End of year $2,155,763 ==========
The accompanying notes are an integral part of this statement.
NOTE 1 - DESCRIPTION OF THE PLAN
Sirius Satellite Radio Inc. ("Sirius Radio") sponsors the Sirius Satellite Radio
401(k) Savings Plan (the "Plan"). The inception date of the Plan was September 1, 1998 and the Plan has a fiscal year end of December 31.
The following description of the Plan provides only general information. Participants should refer to the Plan document for a more complete description of the Plan's provisions. Information with regard to eligibility, contributions, distributions, vesting, trustees, withdrawals, loans, fund redistribution and definitions of all terms are contained in that document.
The Plan is a defined contribution plan covering all non-union employees of Sirius Radio who have attained 21 years of age. Participation in the Plan begins on the first day of the first month following an employee's date of hire. The Plan is subject to the provisions of the Employment Retirement Income Securities Act ("ERISA").
On November 11, 1999, the Plan sponsor changed its corporate name from CD Radio
Inc. to Sirius Satellite Radio Inc. and amended the Plan to change the name of
the Plan from the CD Radio 401(k) Savings Plan to the Sirius Satellite Radio
401(k) Savings Plan.
Participants may elect to contribute up to 12% of compensation, as defined, provided their contributions do not exceed maximum allowable amounts under the Internal Revenue Code (the "Code"). Under the Code, individual contributions for which taxes may be deferred were limited to $10,000 in 1999 and 1998. Participants may also contribute amounts representing distributions from other qualified defined benefit or defined contribution plans. Participants direct the investment into various investment options offered by the Plan. The nine investment options currently offered by the Plan consist of seven mutual funds, a long-term bond fund and Sirius Radio common stock.
The Plan provides for employer matching contributions based on employee contribution levels. Sirius Radio made an employer matching contribution on a dollar for dollar basis for the first $10,000 deferred by each employee during the years ended December 31, 1999 and 1998. This employer matching contribution is in the form of common stock of Sirius Radio. Each plan year, Sirius Radio will review and determine the employer matching contributions for the subsequent plan year. Employees are eligible to receive the employer matching contribution during a year in which the employee has performed at least one hour of service, regardless of employment status on the last day of the plan year.
Administrative expenses may be paid by the Plan, by Sirius Radio or through the use of Plan forfeitures. For the Plan years ended December 31, 1999 and 1998 all administrative expenses were paid by Sirius Radio and through the use of Plan forfeitures.
Each participant's account is credited with participant contributions, employer matching, regular employer contributions and allocations of Plan earnings. Allocations of investment income are based on participant earnings or account balances, as defined. A participant is entitled to the benefit that can be provided from the participant's vested account balance.
Participants are immediately vested in their contributions plus earnings thereon. Vesting in company matching and regular contributions begins one year after employment at a rate of 33 1/3% per year until the completion of the third year of employment when 100% is vested. In addition, a participant becomes fully vested in his or her company matching and regular contributions upon his or her retirement, disability, death, upon reaching age 65 or if there is a change in control of the Sirius Radio.
Distributions of Benefits
Upon termination of employment due to death, disability, retirement or upon attaining age 59 1/2, a participant may receive a lump sum amount equal to the value of the participant's vested interest in his or her account. In addition, participants may elect to withdraw funds from their respective accounts in an event of hardship, as defined.
Participants have the ability to borrow against their vested account balance, up to the lesser of $50,000 or 50% of their vested balance, with a minimum borrowing of $1,000. Loans must generally be repaid within five years in equal installments via payroll deductions, with the exception of loans taken to purchase a principal residence, which may be repaid over a reasonable period of time in excess of five years, as determined by the Plan Administrator. Loans are secured by the balance in the participant's account and bear interest at a comparable rate charged by a bank or other financial institution at the time of the loan.
Forfeitures of non-vested contributions for the years ended December 31, 1999 and 1998 were $11,845 and $3,299, respectively.
NOTE 2 - SUMMARY OF ACCOUNTING POLICIES
Basis of Accounting
The financial statements of the Plan are prepared under the accrual method of accounting.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires the Plan Administrator to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results may differ from those estimates.
Investment Valuation and Income Recognition
The Plan's investments are stated at fair value. Stocks and fund shares are valued at their quoted market price.
Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date.
Payment of Benefits
Benefit payments are recorded when paid.
NOTE 3 -TAX STATUS
The Plan has received a favorable letter of determination dated September 1, 1999 stating that the Plan is designed in accordance with applicable sections of the Code, subject to the adoption of certain proposed amendments to the Plan. The Plan has adopted the proposed amendments and the Plan Administrator believes that the Plan is designed and currently being operated in compliance with the applicable requirements of the Code.
NOTE 4 - PLAN TERMINATION
Although it has not expressed any intent to do so, Sirius Radio reserves the right to terminate the Plan, in whole or in part, at any time. In the event that such termination occurs, all amounts credited to participant accounts will become 100% vested. The trustee in accordance with the Plan document will distribute the net assets of the Plan in a uniform and nondiscretionary manner.
Sirius Radio and Merrill Lynch Trust Company, plan trustee, are parties-in-interest with respect to the Plan under the provisions of ERISA. The records of the Plan indicate no party-in-interest transactions which are prohibited by ERISA Section 406 and for which no statutory or administrative exemption exists.
NOTE 6 - INVESTMENTS
The fair value of investments that individually represent 5% or more of the Plan's net assets are as follows:
DECEMBER 31, DECEMBER 31, 1999 1998 ------------ ----------- Sirius Radio Common Stock - Non-participant Directed $898,361 $138,467 Sirius Radio Common Stock - Participant Directed 450,634 108,925 Merrill Lynch S&P 500 Index 220,189 34,678 Davis New York Venture Fund 143,066 19,474 MFS Emerging Growth Fund 111,709 n/a
During 1999, the Plan's investments (including gains and losses on investments bought and sold, as well as held during the year) appreciated in value by $550,364 as follows:
Sirius Radio Common Stock $476,127 Mutual funds 77,419 Bond fund (3,182) -------- Total appreciation $550,364 ========
NOTE 7 - NON-PARTICIPANT DIRECTED INVESTMENTS
Non-participant directed funds are invested solely in Sirius Radio common stock. Non-participant directed investments totaled $898,361 and $138,467 as of December 31, 1999 and 1998, respectively. The significant components of the changes in net assets relating to non-participant directed investments is as follows:
Contributions $453,137 Appreciation 312,680 Benefits paid to participants (5,923) -------- Change in non-participant directed funds $759,894 ========
As of December 31, 1999, there are no reconciling items between the Form 5500 and the enclosed Statement of Net Assets Available for Benefits. The following is a reconciliation between the Form 5500 and the enclosed Statement of Changes in Net Assets Available for Benefits:
DECEMBER 31, 1999 ----------------- Net Income per Form 5500 $1,809,010 Benefits requested as of December 31, 1998 and paid during 1999 (1,884) ---------- Net Income per enclosed Statement of Changes in Net Assets Available for Benefits $1,807,126 ==========
(c) DESCRIPTION OF INVESTMENT, INCLUDING MATURITY DATE, RATE OF (b) IDENTITY OF ISSUER, BORROWER, INTEREST, COLLATERAL, (a) LESSOR OR SIMILAR PARTY PAR OR MATURITY VALUE (d) COST (e) CURRENT VALUE -------------------------------------------------------------------------------------------------------------- *Sirius Satellite Radio Inc. Common Stock, 30,212 $ 819,766** $1,348,995** shares in participation *Merrill Lynch Trust Company S&P 500 Index Fund, n/a 220,189 12,164 shares in participation Davis Selected Advisors New York Venture n/a 143,066 Fund, 5,056 shares in participation *Merrill Lynch Trust Company Preservation Trust Fund, n/a 42,377 42,377 shares in participation MFS Investment Management Emerging Growth Fund, n/a 111,709 1,717 shares in participation *Merrill Lynch Trust Company Global Allocation Fund, n/a 46,603 3,331 shares in participation *Merrill Lynch Trust Company Basic Value Fund, n/a 68,812 1,804 shares in participation IVY Management, Inc. Bond Fund, 5,960 shares in participation n/a 49,361 AIM Management Group Inc. Constellation Fund, 2,325 shares in participation n/a 92,949 ---------- Total Investments $2,124,061 ==========
*Represents a party-in-interest
** Balances consist of participant and non-participant directed investments
The accompanying notes are an integral part of this schedule.
(h) CURRENT VALUE (a) IDENTITY OF (b) DESCRIPTION NUMBER OF (c) PURCHASE (d) SELLING (g) COST OF ASSET ON (i) NET GAIN PARTY INVOLVED OF ASSET TRANSACTIONS PRICE PRICE OF ASSET TRANSACTION DATE OR (LOSS) ---------------------------------------------------------------------------------------------------------------------------- *Sirius Satellite Radio Inc. - Non-participant Directed Common Stock 24 $448,703 n/a $448,703 $ 448,703 n/a Common Stock 2 n/a $1,909 1,477 1,909 $ 432
(A) Reportable transactions are those purchases and sales of the same non- participant directed security which, individually or in the aggregate, exceed 5% of the Plan's assets as of the beginning of the plan year.
*Represents a party-in-interest
The accompanying notes are an integral part of this schedule.
The Plan. Pursuant to the requirements of the Securities and Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
By: /s/ Edward Weber, Jr. -------------------------- Edward Weber, Jr. Vice President and Controller (Principal Accounting Officer)
June 28, 2000
As independent public accountants, we hereby consent to the incorporation of our report included in this Form 11-K, into the Company's previously filed Registration Statements on Form S-3 (File Nos. 333-52893, 333-85847 and 333-86003), Form S-4 (File No. 333-69275) and Form S-8 (File Nos. 333-65473, 333-15085, 33-95118, 33-92588 and 333-31362).
New York, New York
June 28, 2000