Current Report


 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

_____________________

 

FORM 8-K

 

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

 

Date of Report (Date of earliest event reported): February 5, 2013

 

 

SIRIUS XM RADIO INC.

(Exact Name of Registrant as Specified in Charter)

 

 

Delaware 001-34295 52-1700207

(State or other Jurisdiction

of Incorporation)

(Commission File Number)

(I.R.S. Employer

Identification No.)

 

1221 Avenue of the Americas, 36th Fl., New York, NY 10020
(Address of Principal Executive Offices) (Zip Code)

 

Registrant's telephone number, including area code: (212) 584-5100

 

_____________________________

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

£ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

£ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

£ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

£ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
   
 

 
 

 

Item 2.02      Results of Operations and Financial Condition

 

On February 5, 2013, we reported our financial and operating results for the three months and year ended December 31, 2012. These results are discussed in the press release attached hereto as Exhibit 99.1, which is incorporated by reference in its entirety.

 

Item 9.01      Financial Statements and Exhibits

 

(a) Not Applicable.

 

(b) Not Applicable.

 

(c) Not Applicable.

 

(d) Exhibits.

 

The Exhibit Index attached hereto is incorporated herein.

 

 

2

 


 
 

 

SIGNATURES

 

Pursuant to the requirements 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.

 

  SIRIUS XM RADIO INC.
     
     
     
  By: /s/ Patrick L. Donnelly           
         Patrick L. Donnelly
         Executive Vice President, General
         Counsel and Secretary

 

Dated: February 5, 2013

 

 

3

 


 
 

 

EXHIBITS

 

Exhibit

Description of Exhibit

 

99.1 Press Release dated February 5, 2013

 

4

 


Exhibit 99.1

(SIRIUSXM LOGO)

SiriusXM Reports 2012 Results

 

 

 

 

Subscribers Grow to a Record 23.9 Million

 

Record Revenue of $3.4 Billion, Up 13%

 

Net Income of $3.5 Billion Includes an Income Tax Benefit of $3.0 Billion

 

Adjusted EBITDA Reaches a Record $920 Million, Up 26%

 

Free Cash Flow Grows 71% to a Record $709 Million

NEW YORK – February 5, 2013 – Sirius XM Radio (NASDAQ: SIRI) today announced fourth quarter and full year 2012 financial and operating results, including 2012 revenue of $3.4 billion, up 13% from 2011 revenue of $3.0 billion. Net income for 2012 and 2011 was $3.5 billion and $427 million, respectively, or $0.51 and $0.07 per diluted share, respectively. Net income for 2012 included a $3.0 billion income tax benefit and $133 million loss on extinguishment of debt. Adjusted EBITDA in 2012 was $920 million, up 26% from $731 million in 2011.

“Thanks to the outstanding team at SiriusXM, we capped a great 2012 with a strong fourth quarter, adding more than 500,000 net new subscribers and attaining outstanding revenue, adjusted EBITDA, and free cash flow. SiriusXM also returned capital to shareholders for the first time in the history of satellite radio through a $327 million special cash dividend in December. We are confident in our guidance for growth in 2013 and continue to be sharply focused on enhancing shareholder value, including through our recently announced common stock repurchase program that we are initiating this year,” said Jim Meyer, Chief Executive Officer, SiriusXM.

“We continue to broaden our Internet capabilities to expand the user experience and strengthen our in-vehicle technologies. We are thrilled to announce that our personalized radio feature, MySXM, is now in public beta testing and will be available to our Internet subscribers in the near future. We are committed to ensuring SiriusXM’s long-term leadership in audio and data services, particularly in vehicles, and we will do that by continuing to innovate and improve our technology, programming, and customer care,” noted Meyer.

Additional 2012 highlights include:

 

 

 

 

Record post-merger subscriber growth. Net subscriber additions of 2.0 million in 2012 were higher than in any year since 2007, before the 2008 merger of Sirius and XM. Self-pay net subscriber additions improved by 36% year-over-year to nearly 1.7 million, resulting in an all-time high self-pay subscriber base of nearly 19.6 million. The total paid subscriber base rose to a record high 23.9 million. Total paid and unpaid trials were 6.1 million at year-end 2012.

 

Churn and conversion remains stable. Self-pay monthly churn was 1.9% in 2012, unchanged from 2011. New vehicle consumer conversion rate was 45% in 2012, also unchanged from 2011.




 

 

 

 

Free cash flow grows to record level. Free cash flow was $709 million in 2012, an increase of 71% from $416 million in 2011. This figure represents the highest annual free cash flow attained in the history of the Company.

FOURTH QUARTER 2012 HIGHLIGHTS

Revenue in the fourth quarter of 2012 was up 14% to $892 million from $784 million in the fourth quarter of 2011. Net income for the fourth quarters of 2012 and 2011 was $156 million and $71 million, respectively, or $0.02 and $0.01 per diluted share, respectively. Adjusted EBITDA was $230 million for the fourth quarter of 2012, up 38%.

Additional fourth quarter 2012 highlights include:

 

 

 

 

Ramping self-pay subscriber growth. Self-pay net subscriber additions improved by 41% to approximately 529,000 in the fourth quarter of 2012 from approximately 374,000 in the fourth quarter of 2011.

 

Self-pay churn improves. Self-pay monthly churn was 1.8% in the fourth quarter of 2012, an improvement from 1.9% in the fourth quarter of 2011 and 2.0% in the third quarter of 2012. New vehicle consumer conversion rate was 44% in the fourth quarter of 2012, unchanged from the fourth quarter of 2011.

 

Substantial free cash flow improvement. Free cash flow grew by 40% to $269 million in the fourth quarter of 2012, a record amount for a single quarter, from $192 million in the fourth quarter of 2011.

“In 2012, we took significant steps to strengthen SiriusXM’s balance sheet. We paid down more than $1 billion of short maturity, high-coupon debt and replaced it with $400 million of 10 year, 5.25% debt and a $1.25 billion undrawn revolving credit facility. We ended the year with more than $520 million of cash after paying a special cash dividend in December that totaled $327 million. With debt to adjusted EBITDA falling from 4.1x at December 2011 to under 2.7x at December 2012, we are below our leverage target and have ample liquidity to pursue strategic opportunities and return capital to stockholders through our $2 billion stock buyback program,” remarked David Frear, SiriusXM’s Executive Vice President and Chief Financial Officer.

2013 GUIDANCE

The Company affirmed its 2013 subscriber, revenue, adjusted EBITDA and free cash flow guidance:

 

 

 

 

Self-pay net subscriber additions of approximately 1.6 million,

 

Total net subscriber additions of approximately 1.4 million,

 

Revenue of over $3.7 billion,

 

Adjusted EBITDA of over $1.1 billion, and

 

Free cash flow approaching $900 million.

STOCK REPURCHASE PROGRAM

As SiriusXM commences its previously announced $2 billion share repurchase program, the Company expects to repurchase shares of common stock from time to time on the open market and in privately negotiated transactions. Liberty Media Corporation, the beneficial owner of approximately 50.2% of the Company’s stock, is no longer required to participate in the share repurchase program on a pro rata basis and has indicated it may or may not do so in the future.


2012 RESULTS

SIRIUS XM RADIO INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended
December 31,

 

For the Twelve Months Ended
December 31,

 

 

 

 

 

 

 

(in thousands, except per share data)

 

2012

 

2011

 

2012

 

2011

 

 

 

 

 

 

 

 

 

 

 

 

 

(Unaudited)

 

(Unaudited )

 

 

 

 

 

 

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

Subscriber revenue

 

$

774,466

 

$

672,498

 

$

2,962,665

 

$

2,595,414

 

Advertising revenue, net of agency fees

 

 

22,438

 

 

20,077

 

 

82,320

 

 

73,672

 

Equipment revenue

 

 

22,273

 

 

22,658

 

 

73,456

 

 

71,051

 

Other revenue

 

 

73,238

 

 

68,505

 

 

283,599

 

 

274,387

 

 

 

   

 

   

 

   

 

   

 

Total revenue

 

 

892,415

 

 

783,738

 

 

3,402,040

 

 

3,014,524

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of services:

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue share and royalties

 

 

141,641

 

 

130,436

 

 

551,012

 

 

471,149

 

Programming and content

 

 

73,795

 

 

70,367

 

 

278,997

 

 

281,234

 

Customer service and billing

 

 

82,346

 

 

67,052

 

 

294,980

 

 

259,719

 

Satellite and transmission

 

 

18,635

 

 

18,663

 

 

72,615

 

 

75,902

 

Cost of equipment

 

 

12,465

 

 

13,201

 

 

31,766

 

 

33,095

 

Subscriber acquisition costs

 

 

126,683

 

 

116,771

 

 

474,697

 

 

434,482

 

Sales and marketing

 

 

72,446

 

 

68,302

 

 

248,905

 

 

222,773

 

Engineering, design and development

 

 

16,374

 

 

14,186

 

 

48,843

 

 

53,435

 

General and administrative

 

 

68,120

 

 

63,270

 

 

261,905

 

 

238,738

 

Depreciation and amortization

 

 

66,814

 

 

67,015

 

 

266,295

 

 

267,880

 

 

 

   

 

   

 

   

 

   

 

Total operating expenses

 

 

679,319

 

 

629,263

 

 

2,530,015

 

 

2,338,407

 

 

 

   

 

   

 

   

 

   

 

Income from operations

 

 

213,096

 

 

154,475

 

 

872,025

 

 

676,117

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net of amounts capitalized

 

 

(45,545

)

 

(75,208

)

 

(265,321

)

 

(304,938

)

Loss on extinguishment of debt and credit facilities, net

 

 

 

 

 

 

(132,726

)

 

(7,206

)

Interest and investment income (loss)

 

 

3,907

 

 

(4,620

)

 

716

 

 

73,970

 

Other income (loss)

 

 

412

 

 

1,017

 

 

(226

)

 

3,252

 

 

 

   

 

   

 

   

 

   

 

Total other expense

 

 

(41,226

)

 

(78,811

)

 

(397,557

)

 

(234,922

)

 

 

   

 

   

 

   

 

   

 

Income before income taxes

 

 

171,870

 

 

75,664

 

 

474,468

 

 

441,195

 

Income tax (expense) benefit

 

 

(15,626

)

 

(4,328

)

 

2,998,234

 

 

(14,234

)

 

 

   

 

   

 

   

 

   

 

Net income

 

$

156,244

 

$

71,336

 

$

3,472,702

 

$

426,961

 

 

 

   

 

   

 

   

 

   

 

Realized loss on XM Canada investment foreign currency adjustment

 

 

 

 

 

 

 

 

6,072

 

Foreign currency translation adjustment, net of tax

 

 

87

 

 

(327

)

 

49

 

 

(140

)

 

 

   

 

   

 

   

 

   

 

Comprehensive income

 

$

156,331

 

$

71,009

 

$

3,472,751

 

$

432,893

 

 

 

   

 

   

 

   

 

   

 

Net income per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.02

 

$

0.01

 

$

0.55

 

$

0.07

 

 

 

   

 

   

 

   

 

   

 

Diluted

 

$

0.02

 

$

0.01

 

$

0.51

 

$

0.07

 

 

 

   

 

   

 

   

 

   

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

5,218,827

 

 

3,751,423

 

 

4,209,073

 

 

3,744,606

 

 

 

   

 

   

 

   

 

   

 

Diluted

 

 

6,634,911

 

 

6,501,014

 

 

6,873,786

 

 

6,500,822

 

 

 

   

 

   

 

   

 

   

 



SIRIUS XM RADIO INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

 

 

 

 

 

 

 

 

 

 

As of December 31,

 

 

 

 

 

 

 

2012

 

2011

 

 

 

 

 

 

 

(in thousands, except share and per share data)

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

520,945

 

$

773,990

 

Accounts receivable, net

 

 

106,142

 

 

101,705

 

Receivables from distributors

 

 

104,425

 

 

84,817

 

Inventory, net

 

 

25,337

 

 

36,711

 

Prepaid expenses

 

 

122,157

 

 

125,967

 

Related party current assets

 

 

13,167

 

 

14,702

 

Deferred tax asset

 

 

923,972

 

 

132,727

 

Other current assets

 

 

12,037

 

 

6,335

 

 

 

   

 

   

 

Total current assets

 

 

1,828,182

 

 

1,276,954

 

Property and equipment, net

 

 

1,571,922

 

 

1,673,919

 

Long-term restricted investments

 

 

3,999

 

 

3,973

 

Deferred financing fees, net

 

 

38,677

 

 

42,046

 

Intangible assets, net

 

 

2,519,610

 

 

2,573,638

 

Goodwill

 

 

1,815,365

 

 

1,834,856

 

Related party long-term assets

 

 

44,954

 

 

54,953

 

Long-term deferred tax asset

 

 

1,219,256

 

 

 

Other long-term assets

 

 

12,878

 

 

35,657

 

 

 

   

 

   

 

Total assets

 

$

9,054,843

 

$

7,495,996

 

 

 

   

 

   

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Accounts payable and accrued expenses

 

$

587,652

 

$

543,193

 

Accrued interest

 

 

33,954

 

 

70,405

 

Current portion of deferred revenue

 

 

1,474,138

 

 

1,333,965

 

Current portion of deferred credit on executory contracts

 

 

207,854

 

 

284,108

 

Current maturities of long-term debt

 

 

4,234

 

 

1,623

 

Related party current liabilities

 

 

6,756

 

 

14,302

 

 

 

   

 

   

 

Total current liabilities

 

 

2,314,588

 

 

2,247,596

 

Deferred revenue

 

 

159,501

 

 

198,135

 

Deferred credit on executory contracts

 

 

5,175

 

 

218,199

 

Long-term debt

 

 

2,222,080

 

 

2,683,563

 

Long-term related party debt

 

 

208,906

 

 

328,788

 

Deferred tax liability

 

 

69

 

 

1,011,084

 

Related party long-term liabilities

 

 

18,966

 

 

21,741

 

Other long-term liabilities

 

 

85,993

 

 

82,745

 

 

 

   

 

   

 

Total liabilities

 

 

5,015,278

 

 

6,791,851

 

 

 

   

 

   

 

Stockholders’ equity:

 

 

 

 

 

 

 

Preferred stock, par value $0.001; 50,000,000 authorized at December 31, 2012 and 2011:

 

 

 

 

 

 

 

Series A convertible preferred stock; no shares issued and outstanding at December 31, 2012 and 2011

 

 

 

 

 

Convertible perpetual preferred stock, series B-1 (liquidation preference of $0.001 per share at December 31, 2012 and 2011); 6,250,100 and 12,500,000 shares issued and outstanding at December 31, 2012 and 2011, respectively

 

 

6

 

 

13

 

Common stock, par value $0.001; 9,000,000,000 shares authorized at December 31, 2012 and 2011; 5,262,440,085 and 3,753,201,929 shares issued and outstanding at December 31, 2012 and 2011, respectively

 

 

5,263

 

 

3,753

 

Accumulated other comprehensive income, net of tax

 

 

120

 

 

71

 

Additional paid-in capital

 

 

10,345,566

 

 

10,484,400

 

Accumulated deficit

 

 

(6,311,390

)

 

(9,784,092

)

 

 

   

 

   

 

Total stockholders’ equity

 

 

4,039,565

 

 

704,145

 

 

 

   

 

   

 

Total liabilities and stockholders’ equity

 

$

9,054,843

 

$

7,495,996

 

 

 

   

 

   

 



SIRIUS XM RADIO INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

 

 

 

 

 

 

 

 

 

 

For the Years Ended December 31,

 

 

 

 

 

(in thousands)

 

2012

 

2011

 

 

 

 

 

 

 

Cash flows from operating activities:

 

 

 

 

 

 

 

Net income

 

$

3,472,702

 

$

426,961

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

Depreciation and amortization

 

 

266,295

 

 

267,880

 

Non-cash interest expense, net of amortization of premium

 

 

35,924

 

 

39,515

 

Provision for doubtful accounts

 

 

34,548

 

 

33,164

 

Amortization of deferred income related to equity method investment

 

 

(2,776

)

 

(2,776

)

Loss on extinguishment of debt and credit facilities, net

 

 

132,726

 

 

7,206

 

Gain on merger of unconsolidated entities

 

 

 

 

(75,768

)

Loss on unconsolidated entity investments, net

 

 

420

 

 

6,520

 

Dividend received from unconsolidated entity investment

 

 

1,185

 

 

 

Loss on disposal of assets

 

 

657

 

 

269

 

Share-based payment expense

 

 

63,822

 

 

53,190

 

Deferred income taxes

 

 

(3,001,818

)

 

8,264

 

Other non-cash purchase price adjustments

 

 

(289,050

)

 

(275,338

)

Distribution from investment in unconsolidated entity

 

 

 

 

4,849

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

Accounts receivable

 

 

(38,985

)

 

(13,211

)

Receivables from distributors

 

 

(19,608

)

 

(17,241

)

Inventory

 

 

11,374

 

 

(14,793

)

Related party assets

 

 

9,523

 

 

30,036

 

Prepaid expenses and other current assets

 

 

647

 

 

8,525

 

Other long-term assets

 

 

22,779

 

 

36,490

 

Accounts payable and accrued expenses

 

 

46,043

 

 

(32,010

)

Accrued interest

 

 

(36,451

)

 

(2,048

)

Deferred revenue

 

 

101,311

 

 

55,336

 

Related party liabilities

 

 

(7,545

)

 

(1,542

)

Other long-term liabilities

 

 

3,042

 

 

152

 

 

 

   

 

   

 

Net cash provided by operating activities

 

 

806,765

 

 

543,630

 

 

 

   

 

   

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

Additions to property and equipment

 

 

(97,293

)

 

(137,429

)

Purchase of restricted and other investments

 

 

(26

)

 

(826

)

Release of restricted investments

 

 

 

 

250

 

Return of capital from investment in unconsolidated entity

 

 

 

 

10,117

 

 

 

   

 

   

 

Net cash used in investing activities

 

 

(97,319

)

 

(127,888

)

 

 

   

 

   

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

Proceeds from exercise of stock options

 

 

123,369

 

 

11,553

 

Payment of premiums on redemption of debt

 

 

(100,615

)

 

(5,020

)

Repayment of long-term borrowings

 

 

(915,824

)

 

(234,976

)

Repayment of related party long-term borrowings

 

 

(126,000

)

 

 

Long-term borrowings, net of costs

 

 

383,641

 

 

 

Dividends paid

 

 

(327,062

)

 

 

 

 

   

 

   

 

Net cash used in financing activities

 

 

(962,491

)

 

(228,443

)

 

 

   

 

   

 

Net (decrease) increase in cash and cash equivalents

 

 

(253,045

)

 

187,299

 

Cash and cash equivalents at beginning of period

 

 

773,990

 

 

586,691

 

 

 

   

 

   

 

Cash and cash equivalents at end of period

 

$

520,945

 

$

773,990

 

 

 

   

 

   

 



Subscriber Data and Operating Metrics

The following table contains subscriber data and key operating metrics for the three and twelve months ended December 31, 2012 and 2011, respectively:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unaudited

 

 

 

 

 

 

 

For the Three Months Ended December 31,

 

For the Twelve Months Ended December 31,

 

 

 

 

 

 

 

 

 

2012

 

2011

 

2012

 

2011

 

 

 

 

 

 

 

 

 

 

 

 

Beginning subscribers

 

 

23,365,383

 

 

21,349,858

 

 

21,892,824

 

 

20,190,964

 

Gross subscriber additions

 

 

2,553,489

 

 

2,326,174

 

 

9,617,771

 

 

8,696,020

 

Deactivated subscribers

 

 

(2,018,536

)

 

(1,783,208

)

 

(7,610,259

)

 

(6,994,160

)

 

 

   

 

   

 

   

 

   

 

Net additions

 

 

534,953

 

 

542,966

 

 

2,007,512

 

 

1,701,860

 

 

 

   

 

   

 

   

 

   

 

Ending subscribers

 

 

23,900,336

 

 

21,892,824

 

 

23,900,336

 

 

21,892,824

 

 

 

   

 

   

 

   

 

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Self-pay

 

 

19,570,274

 

 

17,908,742

 

 

19,570,274

 

 

17,908,742

 

Paid promotional

 

 

4,330,062

 

 

3,984,082

 

 

4,330,062

 

 

3,984,082

 

 

 

   

 

   

 

   

 

   

 

Ending subscribers

 

 

23,900,336

 

 

21,892,824

 

 

23,900,336

 

 

21,892,824

 

 

 

   

 

   

 

   

 

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Self-pay

 

 

528,755

 

 

374,432

 

 

1,661,532

 

 

1,221,943

 

Paid promotional

 

 

6,198

 

 

168,534

 

 

345,980

 

 

479,917

 

 

 

   

 

   

 

   

 

   

 

Net additions

 

 

534,953

 

 

542,966

 

 

2,007,512

 

 

1,701,860

 

 

 

   

 

   

 

   

 

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Daily weighted average number of subscribers

 

 

23,612,076

 

 

21,542,690

 

 

22,794,170

 

 

20,903,908

 

 

 

   

 

   

 

   

 

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average self-pay monthly churn

 

 

1.8

%

 

1.9

%

 

1.9

%

 

1.9

%

 

 

   

 

   

 

   

 

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

New vehicle consumer conversion rate

 

 

44

%

 

44

%

 

45

%

 

45

%

 

 

   

 

   

 

   

 

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ARPU

 

$

12.12

 

$

11.61

 

$

12.00

 

$

11.58

 

SAC, per gross subscriber addition

 

$

54

 

$

55

 

$

54

 

$

55

 

Glossary

Adjusted EBITDA - EBITDA is defined as net income before interest and investment loss; interest expense, net of amounts capitalized; income tax expense and depreciation and amortization. We adjust EBITDA to remove the impact of other income and expense, loss on extinguishment of debt as well as certain other charges discussed below. This measure is one of the primary non-GAAP financial measures on which we (i) evaluate the performance of our businesses, (ii) base our internal budgets and (iii) compensate management. Adjusted EBITDA is a non-GAAP financial performance measure that excludes (if applicable): (i) certain adjustments as a result of the purchase price accounting for the merger of Sirius and XM, (ii) goodwill impairment, (iii) restructuring, impairments, and related costs, (iv) depreciation and amortization and (v) share-based payment expense. The purchase price accounting adjustments include: (i) the elimination of deferred revenue associated with the investment in XM Canada, (ii) recognition of deferred subscriber revenues not recognized in purchase price accounting, and (iii) elimination of the benefit of deferred credits on executory contracts, which are primarily attributable to third party arrangements with an OEM and programming providers. We believe adjusted EBITDA is a useful measure of the underlying trend of our operating performance, which provides useful information about our business apart from the costs associated with our physical plant, capital structure and purchase price accounting. We believe investors find this non-GAAP financial measure useful when analyzing our results and comparing our operating performance to the performance of other communications, entertainment and media companies. We believe investors use current and projected adjusted EBITDA to estimate our current and prospective enterprise value and to make investment


decisions. Because we fund and build-out our satellite radio system through the periodic raising and expenditure of large amounts of capital, our results of operations reflect significant charges for depreciation expense. The exclusion of depreciation and amortization expense is useful given significant variation in depreciation and amortization expense that can result from the potential variations in estimated useful lives, all of which can vary widely across different industries or among companies within the same industry. We believe the exclusion of restructuring, impairments and related costs is useful given the nature of these expenses. We also believe the exclusion of share-based payment expense is useful given the significant variation in expense that can result from changes in the fair value as determined using the Black-Scholes-Merton model which varies based on assumptions used for the expected life, expected stock price volatility and risk-free interest rates.

Adjusted EBITDA has certain limitations in that it does not take into account the impact to our statements of comprehensive income of certain expenses, including share-based payment expense and certain purchase price accounting for the merger of Sirius and XM. We endeavor to compensate for the limitations of the non-GAAP measure presented by also providing the comparable GAAP measure with equal or greater prominence and descriptions of the reconciling items, including quantifying such items, to derive the Non-GAAP measure. Investors that wish to compare and evaluate our operating results after giving effect for these costs, should refer to net income as disclosed in our consolidated statements of comprehensive income. Since adjusted EBITDA is a non-GAAP financial performance measure, our calculation of adjusted EBITDA may be susceptible to varying calculations; may not be comparable to other similarly titled measures of other companies; and should not be considered in isolation, as a substitute for, or superior to measures of financial performance prepared in accordance with GAAP. The reconciliation of net income to the adjusted EBITDA is calculated as follows (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unaudited

 

 

 

 

 

 

 

For the Three Months Ended
December 31,

 

For the Twelve Months Ended
December 31,

 

 

 

 

 

 

 

 

 

2012

 

2011

 

2012

 

2011

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (GAAP):

 

$

156,244

 

$

71,336

 

$

3,472,702

 

$

426,961

 

Add back items excluded from Adjusted EBITDA:

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchase price accounting adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

 

1,880

 

 

1,958

 

 

7,479

 

 

10,910

 

Operating expenses

 

 

(68,781

)

 

(71,785

)

 

(289,278

)

 

(277,258

)

Share-based payment expense, net of purchase price accounting adjustments

 

 

17,462

 

 

15,614

 

 

63,822

 

 

53,369

 

Depreciation and amortization (GAAP)

 

 

66,814

 

 

67,015

 

 

266,295

 

 

267,880

 

Interest expense, net of amounts capitalized (GAAP)

 

 

45,545

 

 

75,208

 

 

265,321

 

 

304,938

 

Loss on extinguishment of debt and credit facilities, net (GAAP)

 

 

 

 

 

 

132,726

 

 

7,206

 

Interest and investment (income) loss (GAAP)

 

 

(3,907

)

 

4,620

 

 

(716

)

 

(73,970

)

Other (income) loss (GAAP)

 

 

(412

)

 

(1,017

)

 

226

 

 

(3,252

)

Income tax expense (benefit) (GAAP)

 

 

15,626

 

 

4,328

 

 

(2,998,234

)

 

14,234

 

 

 

   

 

   

 

   

 

   

 

Adjusted EBITDA

 

$

230,471

 

$

167,277

 

$

920,343

 

$

731,018

 

 

 

   

 

   

 

   

 

   

 

Adjusted Revenues and Operating Expenses - We define this Non-GAAP financial measure as our actual revenues and operating expenses adjusted to exclude the impact of certain purchase price accounting adjustments and share-based payment expense. We use this non-GAAP financial measure to manage our business, set operational goals and as a basis for determining performance-based compensation for our employees. The following tables reconcile our actual revenues and operating expenses to our adjusted revenues and operating expenses for the three and twelve months ended December 31, 2012 and 2011:



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unaudited For the Three Months Ended December 31, 2012

 

 

 

 

 

(in thousands)

 

As Reported

 

Purchase Price
Accounting
Adjustments

 

Allocation of
Share-based
Payment Expense

 

Adjusted

 

 

 

 

 

 

 

 

 

 

 

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

Subscriber revenue

 

$

774,466

 

$

67

 

$

 

$

774,533

 

Advertising revenue, net of agency fees

 

 

22,438

 

 

 

 

 

 

22,438

 

Equipment revenue

 

 

22,273

 

 

 

 

 

 

22,273

 

Other revenue

 

 

73,238

 

 

1,813

 

 

 

 

75,051

 

 

 

   

 

   

 

   

 

   

 

Total revenue

 

$

892,415

 

$

1,880

 

$

 

$

894,295

 

 

 

   

 

   

 

   

 

   

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of services:

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue share and royalties

 

 

141,641

 

 

38,532

 

 

 

 

180,173

 

Programming and content

 

 

73,795

 

 

4,781

 

 

(1,778

)

 

76,798

 

Customer service and billing

 

 

82,346

 

 

 

 

(521

)

 

81,825

 

Satellite and transmission

 

 

18,635

 

 

 

 

(918

)

 

17,717

 

Cost of equipment

 

 

12,465

 

 

 

 

 

 

12,465

 

Subscriber acquisition costs

 

 

126,683

 

 

21,176

 

 

 

 

147,859

 

Sales and marketing

 

 

72,446

 

 

4,292

 

 

(2,966

)

 

73,772

 

Engineering, design and development

 

 

16,374

 

 

 

 

(1,771

)

 

14,603

 

General and administrative

 

 

68,120

 

 

 

 

(9,508

)

 

58,612

 

Depreciation and amortization (a)

 

 

66,814

 

 

 

 

 

 

66,814

 

Share-based payment expense

 

 

 

 

 

 

17,462

 

 

17,462

 

 

 

   

 

   

 

   

 

   

 

Total operating expenses

 

$

679,319

 

$

68,781

 

$

 

$

748,100

 

 

 

   

 

   

 

   

 

   

 

(a) Purchase price accounting adjustments included above exclude the incremental depreciation and amortization associated with the $785,000 stepped up basis in property, equipment and intangible assets as a result of the merger of Sirius and XM. The increased depreciation and amortization for the three months ended December 31, 2012 was $13,000.



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unaudited For the Three Months Ended December 31, 2011

 

 

 

 

 

(in thousands)

 

As Reported

 

Purchase Price
Accounting
Adjustments

 

Allocation of
Share-based
Payment Expense

 

Adjusted

 

 

 

 

 

 

 

 

 

 

 

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

Subscriber revenue

 

$

672,498

 

$

145

 

$

 

$

672,643

 

Advertising revenue, net of agency fees

 

 

20,077

 

 

 

 

 

 

20,077

 

Equipment revenue

 

 

22,658

 

 

 

 

 

 

22,658

 

Other revenue

 

 

68,505

 

 

1,813

 

 

 

 

70,318

 

 

 

   

 

   

 

   

 

   

 

Total revenue

 

$

783,738

 

$

1,958

 

$

 

$

785,696

 

 

 

   

 

   

 

   

 

   

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of services:

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue share and royalties

 

 

130,436

 

 

33,581

 

 

 

 

164,017

 

Programming and content

 

 

70,367

 

 

12,527

 

 

(1,467

)

 

81,427

 

Customer service and billing

 

 

67,052

 

 

 

 

(425

)

 

66,627

 

Satellite and transmission

 

 

18,663

 

 

 

 

(811

)

 

17,852

 

Cost of equipment

 

 

13,201

 

 

 

 

 

 

13,201

 

Subscriber acquisition costs

 

 

116,771

 

 

21,404

 

 

 

 

138,175

 

Sales and marketing

 

 

68,302

 

 

4,273

 

 

(2,539

)

 

70,036

 

Engineering, design and development

 

 

14,186

 

 

 

 

(1,443

)

 

12,743

 

General and administrative

 

 

63,270

 

 

 

 

(8,929

)

 

54,341

 

Depreciation and amortization (a)

 

 

67,015

 

 

 

 

 

 

67,015

 

Share-based payment expense

 

 

 

 

 

 

15,614

 

 

15,614

 

 

 

   

 

   

 

   

 

   

 

Total operating expenses

 

$

629,263

 

$

71,785

 

$

 

$

701,048

 

 

 

   

 

   

 

   

 

   

 

(a) Purchase price accounting adjustments included above exclude the incremental depreciation and amortization associated with the $785,000 stepped up basis in property, equipment and intangible assets as a result of the merger of Sirius and XM. The increased depreciation and amortization for the three months ended December 31, 2011 was $14,000.



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unaudited For the Year Ended December 31, 2012

 

(in thousands)

 

As Reported

 

Purchase Price
Accounting
Adjustments

 

Allocation of
Share-based
Payment Expense

 

Adjusted

 

 

 

 

 

 

 

 

 

 

 

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

Subscriber revenue

 

$

2,962,665

 

$

228

 

$

 

$

2,962,893

 

Advertising revenue, net of agency fees

 

 

82,320

 

 

 

 

 

 

82,320

 

Equipment revenue

 

 

73,456

 

 

 

 

 

 

73,456

 

Other revenue

 

 

283,599

 

 

7,251

 

 

 

 

290,850

 

 

 

   

 

   

 

   

 

   

 

Total revenue

 

$

3,402,040

 

$

7,479

 

$

 

$

3,409,519

 

 

 

   

 

   

 

   

 

   

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of services:

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue share and royalties

 

 

551,012

 

 

146,601

 

 

 

 

697,613

 

Programming and content

 

 

278,997

 

 

37,346

 

 

(6,120

)

 

310,223

 

Customer service and billing

 

 

294,980

 

 

 

 

(1,847

)

 

293,133

 

Satellite and transmission

 

 

72,615

 

 

 

 

(3,329

)

 

69,286

 

Cost of equipment

 

 

31,766

 

 

 

 

 

 

31,766

 

Subscriber acquisition costs

 

 

474,697

 

 

90,503

 

 

 

 

565,200

 

Sales and marketing

 

 

248,905

 

 

14,828

 

 

(10,310

)

 

253,423

 

Engineering, design and development

 

 

48,843

 

 

 

 

(6,238

)

 

42,605

 

General and administrative

 

 

261,905

 

 

 

 

(35,978

)

 

225,927

 

Depreciation and amortization (a)

 

 

266,295

 

 

 

 

 

 

266,295

 

Share-based payment expense

 

 

 

 

 

 

63,822

 

 

63,822

 

 

 

   

 

   

 

   

 

   

 

Total operating expenses

 

$

2,530,015

 

$

289,278

 

$

 

$

2,819,293

 

 

 

   

 

   

 

   

 

   

 

(a) Purchase price accounting adjustments included above exclude the incremental depreciation and amortization associated with the $785,000 stepped up basis in property, equipment and intangible assets as a result of the merger of Sirius and XM. The increased depreciation and amortization for the year ended December 31, 2012 was $53,000.



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unaudited For the Year Ended December 31, 2011

 

 

 

 

 

(in thousands)

 

As Reported

 

Purchase Price
Accounting
Adjustments

 

Allocation of
Share-based
Payment Expense

 

Adjusted

 

 

 

 

 

 

 

 

 

 

 

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

Subscriber revenue

 

$

2,595,414

 

$

3,659

 

$

 

$

2,599,073

 

Advertising revenue, net of agency fees

 

 

73,672

 

 

 

 

 

 

73,672

 

Equipment revenue

 

 

71,051

 

 

 

 

 

 

71,051

 

Other revenue

 

 

274,387

 

 

7,251

 

 

 

 

281,638

 

 

 

   

 

   

 

   

 

   

 

Total revenue

 

$

3,014,524

 

$

10,910

 

$

 

$

3,025,434

 

 

 

   

 

   

 

   

 

   

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of services:

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue share and royalties

 

 

471,149

 

 

126,941

 

 

 

 

598,090

 

Programming and content

 

 

281,234

 

 

49,172

 

 

(6,212

)

 

324,194

 

Customer service and billing

 

 

259,719

 

 

18

 

 

(1,502

)

 

258,235

 

Satellite and transmission

 

 

75,902

 

 

313

 

 

(2,678

)

 

73,537

 

Cost of equipment

 

 

33,095

 

 

 

 

 

 

33,095

 

Subscriber acquisition costs

 

 

434,482

 

 

85,491

 

 

 

 

519,973

 

Sales and marketing

 

 

222,773

 

 

15,233

 

 

(8,193

)

 

229,813

 

Engineering, design and development

 

 

53,435

 

 

31

 

 

(4,851

)

 

48,615

 

General and administrative

 

 

238,738

 

 

59

 

 

(29,933

)

 

208,864

 

Depreciation and amortization (a)

 

 

267,880

 

 

 

 

 

 

267,880

 

Share-based payment expense (b)

 

 

 

 

 

 

53,369

 

 

53,369

 

 

 

   

 

   

 

   

 

   

 

Total operating expenses

 

$

2,338,407

 

$

277,258

 

$

 

$

2,615,665

 

 

 

   

 

   

 

   

 

   

 

(a) Purchase price accounting adjustments included above exclude the incremental depreciation and amortization associated with the $785,000 stepped up basis in property, equipment and intangible assets as a result of the merger of Sirius and XM. The increased depreciation and amortization for the year ended December 31, 2011 was $59,000.

(b) Amounts related to share-based payment expense included in operating expenses were as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Programming and content

 

$

6,185

 

$

27

 

$

 

$

6,212

 

Customer service and billing

 

 

1,484

 

 

18

 

 

 

 

1,502

 

Satellite and transmission

 

 

2,659

 

 

19

 

 

 

 

2,678

 

Sales and marketing

 

 

8,166

 

 

27

 

 

 

 

8,193

 

Engineering, design and development

 

 

4,820

 

 

31

 

 

 

 

4,851

 

General and administrative

 

 

29,874

 

 

59

 

 

 

 

29,933

 

 

 

   

 

   

 

   

 

   

 

Total share-based payment expense

 

$

53,188

 

$

181

 

$

 

$

53,369

 

 

 

   

 

   

 

   

 

   

 

ARPU - is derived from total earned subscriber revenue, net advertising revenue and other subscription-related revenue, net of purchase price accounting adjustments, divided by the number of months in the period, divided by the daily weighted average number of subscribers for the period. Other subscription-related revenue includes the U.S. Music Royalty Fee. Purchase price accounting adjustments include the recognition of deferred subscriber revenues not recognized in purchase price accounting associated with the merger of Sirius and XM. ARPU is calculated as follows (in thousands, except for subscriber and per subscriber amounts):



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unaudited

 

 

 

 

 

 

 

For the Three Months Ended
December 31,

 

For the Twelve Months Ended
December 31,

 

 

 

 

 

 

 

 

 

2012

 

2011

 

2012

 

2011

 

 

 

 

 

 

 

 

 

 

 

 

Subscriber revenue (GAAP)

 

$

774,466

 

$

672,498

 

$

2,962,665

 

$

2,595,414

 

Add: net advertising revenue (GAAP)

 

 

22,438

 

 

20,077

 

 

82,320

 

 

73,672

 

Add: other subscription-related revenue (GAAP)

 

 

61,299

 

 

57,561

 

 

237,868

 

 

231,902

 

Add: purchase price accounting adjustments

 

 

67

 

 

145

 

 

228

 

 

3,659

 

 

 

   

 

   

 

   

 

   

 

 

 

$

858,270

 

$

750,281

 

$

3,283,081

 

$

2,904,647

 

 

 

   

 

   

 

   

 

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Daily weighted average number of subscribers

 

 

23,612,076

 

 

21,542,690

 

 

22,794,170

 

 

20,903,908

 

 

 

   

 

   

 

   

 

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ARPU

 

$

12.12

 

$

11.61

 

$

12.00

 

$

11.58

 

 

 

   

 

   

 

   

 

   

 

Average self-pay monthly churn - is defined as the monthly average of self-pay deactivations for the period divided by the average number of self-pay subscribers for the period.

Customer service and billing expenses, per average subscriber - is derived from total customer service and billing expenses, excluding share-based payment expense and purchase price accounting adjustments associated with the merger of Sirius and XM, divided by the number of months in the period, divided by the daily weighted average number of subscribers for the period. We believe the exclusion of share-based payment expense in our calculation of customer service and billing expenses, per average subscriber, is useful given the significant variation in expense that can result from changes in the fair market value of our common stock, the effect of which is unrelated to the operational conditions that give rise to variations in the components of our customer service and billing expenses. Purchase price accounting adjustments associated with the merger of Sirius and XM include the elimination of the benefit associated with incremental share-based payment arrangements recognized at the merger date. Customer service and billing expenses, per average subscriber, is calculated as follows (in thousands, except for subscriber and per subscriber amounts):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unaudited

 

 

 

 

 

 

 

For the Three Months Ended
December 31,

 

For the Twelve Months Ended
December 31,

 

 

 

 

 

 

 

 

 

2012

 

2011

 

2012

 

2011

 

 

 

 

 

 

 

 

 

 

 

 

Customer service and billing expenses (GAAP)

 

$

82,346

 

$

67,052

 

$

294,980

 

$

259,719

 

Less: share-based payment expense, net of purchase price accounting adjustments

 

 

(521

)

 

(425

)

 

(1,847

)

 

(1,502

)

Add: purchase price accounting adjustments

 

 

 

 

 

 

 

 

18

 

 

 

   

 

   

 

   

 

   

 

 

 

 

81,825

 

 

66,627

 

 

293,133

 

 

258,235

 

 

 

   

 

   

 

   

 

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Daily weighted average number of subscribers

 

 

23,612,076

 

 

21,542,690

 

 

22,794,170

 

 

20,903,908

 

 

 

   

 

   

 

   

 

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Customer service and billing expenses, per average subscriber

 

$

1.16

 

$

1.03

 

$

1.07

 

$

1.03

 

 

 

   

 

   

 

   

 

   

 

Free cash flow - is derived from cash flow provided by operating activities, capital expenditures and restricted and other investment activity. Free cash flow is calculated as follows (in thousands):



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unaudited

 

 

 

 

 

 

 

For the Three Months Ended
December 31,

 

For the Twelve Months Ended
December 31,

 

 

 

 

 

 

 

 

 

2012

 

2011

 

2012

 

2011

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash Flow information

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash provided by operating activities

 

$

293,233

 

$

214,996

 

$

806,765

 

$

543,630

 

Net cash used in investing activities

 

 

(23,773

)

 

(23,190

)

 

(97,319

)

 

(127,888

)

Net cash used in financing activities

 

 

(304,785

)

 

(22,408

)

 

(962,491

)

 

(228,443

)

Free Cash Flow

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash provided by operating activities

 

$

293,233

 

$

214,996

 

$

806,765

 

$

543,630

 

Additions to property and equipment

 

 

(23,747

)

 

(22,364

)

 

(97,293

)

 

(137,429

)

Restricted and other investment activity

 

 

(26

)

 

(826

)

 

(26

)

 

9,541

 

 

 

   

 

   

 

   

 

   

 

Free cash flow

 

$

269,460

 

$

191,806

 

$

709,446

 

$

415,742

 

 

 

   

 

   

 

   

 

   

 

New vehicle consumer conversion rate - is defined as the percentage of owners and lessees of new vehicles that receive our service and convert to become self-paying subscribers after the initial promotion period. At the time satellite radio enabled vehicles are sold or leased, the owners or lessees generally receive trial subscriptions ranging from three to twelve months. Promotional periods generally include the period of trial service plus 30 days to handle the receipt and processing of payments. We measure conversion rate three months after the period in which the trial service ends. The metric excludes rental and fleet vehicles.

Subscriber acquisition cost, per gross subscriber addition - or SAC, per gross subscriber addition, is derived from subscriber acquisition costs and margins from the sale of radios and accessories, excluding share-based payment expense and purchase price accounting adjustments, divided by the number of gross subscriber additions for the period. Purchase price accounting adjustments associated with the merger of Sirius and XM include the elimination of the benefit of amortization of deferred credits on executory contracts recognized at the merger date attributable to an OEM. SAC, per gross subscriber addition, is calculated as follows (in thousands, except for subscriber and per subscriber amounts):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unaudited

 

 

 

 

 

 

 

For the Three Months Ended
December 31,

 

For the Twelve Months Ended
December 31,

 

 

 

 

 

 

 

 

 

2012

 

2011

 

2012

 

2011

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subscriber acquisition costs (GAAP)

 

$

126,683

 

$

116,771

 

$

474,697

 

$

434,482

 

Less: margin from direct sales of radios and accessories (GAAP)

 

 

(9,808

)

 

(9,457

)

 

(41,690

)

 

(37,956

)

Add: purchase price accounting adjustments

 

 

21,176

 

 

21,404

 

 

90,503

 

 

85,491

 

 

 

   

 

   

 

   

 

   

 

 

 

$

138,051

 

$

128,718

 

$

523,510

 

$

482,017

 

 

 

   

 

   

 

   

 

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross subscriber additions

 

 

2,553,489

 

 

2,326,174

 

 

9,617,771

 

 

8,696,020

 

 

 

   

 

   

 

   

 

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SAC, per gross subscriber addition

 

$

54

 

$

55

 

$

54

 

$

55

 

 

 

   

 

   

 

   

 

   

 

###

About Sirius XM Radio

Sirius XM Radio Inc . is the world’s largest radio broadcaster measured by revenue and has 23.9 million subscribers. SiriusXM creates and broadcasts commercial-free music; premier sports talk and live events; comedy; news; exclusive talk and entertainment; and the most comprehensive Latin music, sports and talk programming in radio. SiriusXM is available in vehicles from every major car company in the U.S., from retailers nationwide, and online at siriusxm.com . SiriusXM programming is also available through the SiriusXM Internet Radio App for Android , Apple , and BlackBerry smartphones and other


connected devices. SiriusXM also holds a minority interest in SiriusXM Canada which has more than 2 million subscribers.

This communication contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about future financial and operating results, our plans, objectives, expectations and intentions with respect to future operations, products and services; and other statements identified by words such as “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimated,” “believe,” “intend,” “plan,” “projection,” “outlook” or words of similar meaning. Such forward-looking statements are based upon the current beliefs and expectations of our management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are difficult to predict and generally beyond our control. Actual results may differ materially from the results anticipated in these forward-looking statements.

The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements: our competitive position versus other forms of audio entertainment; our dependence upon automakers; general economic conditions; failure of our satellites, which, in most cases, are not insured; our ability to attract and retain subscribers at a profitable level; royalties we pay for music rights; the unfavorable outcome of pending or future litigation; failure of third parties to perform; and our substantial indebtedness. Additional factors that could cause our results to differ materially from those described in the forward-looking statements can be found in our Annual Report on Form 10-K for the year ended December 31, 2011, which is filed with the Securities and Exchange Commission (the “SEC”) and available at the SEC’s Internet site ( http://www.sec.gov ). The information set forth herein speaks only as of the date hereof, and we disclaim any intention or obligation to update any forward looking statements as a result of developments occurring after the date of this communication.

 

 

 

 

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E-SIRI

Contact Information for Investors and Financial Media:

 

Investors:

 

Hooper Stevens

212 901 6718

hooper.stevens@siriusxm.com

 

Media:

 

Patrick Reilly

212 901 6646

patrick.reilly@siriusxm.com