XM Satellite Radio Holdings Inc. Announces Fourth Quarter and Full Year 2007 Results

Fourth Quarter and Full Year Net Loss Narrows;

2007 Revenue Increases 22% to $ 1.1 Billion;

XM Surpasses 9 Million Subscribers in 2007;

XM-Equipped New Car Production Increases 64% in 2007

WASHINGTON, Feb. 28 /PRNewswire-FirstCall/ -- XM Satellite Radio Holdings Inc. (NASDAQ: XMSR) today reported financial and operating results for the fourth quarter and full year ended December 31, 2007. XM announced that 2007 revenue increased year over year by 22 percent to $1.1 billion. XM added 1.4 million net new subscribers ending 2007 with more than 9 million subscribers, an 18 percent increase over the prior year. In 2007, XM's automotive partners increased production of XM-equipped vehicles by 64 percent over 2006, with 3.5 million installs and more than a million in the fourth quarter alone.

(Logo: http://www.newscom.com/cgi-bin/prnh/20070313/XMLOGO )

"XM substantially improved its business operations in 2007 as we grew our subscriber base and revenues and narrowed our loss, positioning us as a stronger and more focused company better positioned to meet the competitive challenges of the future," said Nate Davis, president and chief executive officer, XM Satellite Radio. "XM has doubled its revenues in the last two years and our investment and robust performance in the new car market establishes a clear path for sustained future growth."

"Our pending merger will benefit shareholders and offer consumers more programming choices and lower prices," Davis continued. "We are pleased with the strong support our merger has received from a broad range of organizations, and we look forward to regulatory approval in the near future."

Fourth Quarter and Full-Year Financial Results

For the fourth quarter of 2007, XM reported total revenue of $308 million, an increase of 20 percent over the $257 million total revenue reported in fourth quarter of 2006. XM's full year 2007 total revenue was $1.1 billion, an increase of 22 percent over the $933 million total revenue recorded in 2006.

Net loss for the fourth quarter of 2007 narrowed by $18 million over the prior year to ($239) million compared to a net loss for the fourth quarter 2006 of ($257) million. Full year net loss improved by $37 million over the prior year to ($682) million compared to a full year 2006 net loss of ($719) million.

Net loss per share for the fourth quarter was 78 cents, which included a total of 25 cents for certain merger and settlement related charges.

Full year 2007 adjusted operating loss of $238 million included merger and settlement charges of $86 million which were excluded from our guidance range of $170 million to $180 million loss. Fourth Quarter adjusted operating loss of $117 million included $58 million of the aforementioned $86 million of merger and settlement charges.

Industry-leading Programming

2007 was another exceptional year for XM programming. XM kicked off its third season of Major League Baseball and its first season of college sports from all six major conferences: the ACC, BIG EAST, Big Ten, Big 12, Pac-10, and SEC. The company introduced new channels, including XMX, an innovative new channel featuring XM's most popular and critically-acclaimed original music shows all in one place. In 2007, Bob Dylan launched the second season of his award-winning show, "Theme Time Radio Hour," and XM recently marked the expansion of exclusive programming on the popular Oprah & Friends channel. In anticipation of the presidential primary season, XM debuted the nation's first radio channel dedicated to a presidential campaign, POTUS '08, which was named "one of the ten most important voices to listen to" this election year by Best Life magazine.

XM's Automotive Partners Continue to Expand Availability of XM-Equipped Vehicles - First Toyota Brands with Factory-Equipped XM Now At Dealerships

In 2007, XM's automotive partners produced 3.5 million XM-equipped vehicles. The fourth quarter of 2007 saw XM's automotive partners continue to announce and introduce more vehicle models with factory-equipped XM and the real-time traffic service XM NavTraffic. The all-new 2009 Toyota Corolla and Matrix are now available with factory-installed XM Radio. In addition, XM NavTraffic will be available on Corolla and Matrix this spring. General Motors expanded XM as standard equipment on all 2008 Buick, HUMMER, and Saab models. Hyundai announced that the 2008 Tiburon, Accent, and Tuscon models with standard XM will be available in the spring of 2008. Factory-equipped XM and XM NavTraffic options for the 2009 Nissan Murano are available now, and Kawasaki unveiled its first motorcycles with satellite radio in partnership with XM.

XM Podcasts Debut on XMRadio.com and Apple's iTunes Store

In December 2007, XM introduced free podcasts of select XM programs made available on XMRadio.com and Apple's iTunes Store. Two of XM's podcasts ranked among iTunes Top 10 Podcasts. For the first time, consumers can download a variety of XM talk, music, comedy, and sports podcasts for portable media players and personal computers. These podcasts let consumers experience a small, but compelling, sample of XM's programming diversity.

XM Radios Take Top Honors in 2007 Year-End Reviews

XM's newest radio, the XpressRC plug-and-play receiver, took top honors in 2007 year-end product reviews by WIRED, Popular Science, and Men's Health magazines. In addition, XM received four Innovations Awards for outstanding products at the 2008 Consumer Electronics Show.

Webcast and Conference Call Information

XM will host an earnings conference call to discuss its full year and fourth quarter 2007 results today, February 28, at 10:00 AM Eastern Time. Prior to the call, you can access XM Radio's full year and fourth quarter 2007 results on the Company's website at http://www.xmradio.com/. To listen to the conference call via telephone, please call one of the following numbers approximately 10 minutes prior to the planned start of the call:

  Call-in number: (877) 265-5808
  Local call-in number: (706) 679-7931
  Conference ID#: 35479749

The conference call can also be accessed through a live webcast on the Company's website at http://www.xmradio.com/(click on "Investor Info" link at the bottom of the page). The webcast of the call will also be archived on the Company's Web site. A replay of the conference call will be available after 11:30 a.m. ET on February 28 until May 28 via the following numbers:

  Playback Numbers: (800) 642-1687
  Local playback number: (706) 645-9291
  Conference ID#: 35479749
About XM

XM (NASDAQ: XMSR) is America's number one satellite radio company with more than 9 million subscribers. Broadcasting live daily from studios in Washington, DC, New York City, Chicago, Nashville, Toronto and Montreal, XM's 2008 lineup includes more than 170 digital channels of choice from coast to coast: commercial-free music, premier sports, news, talk radio, comedy, children's and entertainment programming; and the most advanced traffic and weather information.

XM, the leader in satellite-delivered entertainment and data services for the automobile market through partnerships with General Motors, Honda, Hyundai, Nissan, Porsche, Subaru, Suzuki and Toyota is available in 140 different vehicle models for 2008. XM's industry-leading products are available at consumer electronics retailers nationwide. XM programming is also available through XM Radio Online, as downloads of original XM shows via podcasts from XM's Web site or the Apple's iTunes Store, and as streams of commercial-free XM music channels to AT&T and Alltel wireless customers through XM Radio Mobile. For more information about XM hardware, programming and partnerships, please visit http://www.xmradio.com/.

Factors that could cause actual results to differ materially from those in the forward-looking statements in this press release include demand for XM Satellite Radio's service, our significant expenditures and losses, our dependence on technology and third party vendors, our potential need for additional financing, the health of our satellites, the impact of our proposed merger with Sirius, our substantial indebtedness as well as other risks described in XM Satellite Radio Holdings Inc.'s Form 10-K filed with the Securities and Exchange Commission on 3-1-07. Copies of the filing are available upon request from XM Radio's Investor Relations Department.


                                Three months ended      Twelve months ended
                                    December 31,            December 31,
  (in thousands, except
   share and per share
   data)                          2007        2006        2007        2006
                            (unaudited)  (unaudited)
    Subscription               $266,445    $220,542  $1,005,479    $825,626
    Activation                    5,006       4,459      19,354      16,192
    Merchandise                  13,068      10,076      28,333      21,720
    Net ad sales                 10,801      11,045      39,148      35,330
    Other                        12,379      11,000      44,228      34,549
  Total revenue                 307,699     257,122   1,136,542     933,417
  Operating expenses:
    Cost of revenue (excludes
     depreciation &
     shown below):
      Revenue share & royalties 106,779      43,405     256,344     149,010
      Customer care &

       billing operations (1)    36,703      28,850     126,776     104,871
      Cost of merchandise        21,448      20,525      62,003      48,949
      Ad sales (1)                4,848       4,768      20,592      15,961
      Satellite &
       terrestrial (1)           13,271      12,729      54,434      49,019
      Broadcast & operations:
        Broadcast (1)             7,033       5,869      26,602      23,049
        Operations (1)            9,351       9,164      38,465      34,683
      Total broadcast &
       operations                16,384      15,033      65,067      57,732
      Programming & content (1)  51,297      46,427     183,900     165,196
    Total cost of revenue       250,730     171,737     769,116     590,738
    Research & development
     (excludes depreciation
     & amortization, shown
     below) (1)                   9,265       9,080      33,077      37,428
    General & administrative
     (excludes depreciation
     & amortization, shown
     below) (1)                  33,755      30,327     150,109      88,626
    Marketing (excludes
     depreciation &

     shown below):
      Retention & support (1)    12,702       9,064      44,580      31,842
      Subsidies &
       distribution (1)          90,028      68,822     259,143     224,862
      Advertising &
       marketing (1)             59,639      57,431     178,743     164,379
    Marketing                   162,369     135,317     482,466     421,083
    Amortization of GM
     liability                    6,504       6,504      26,015      29,760
    Total marketing             168,873     141,821     508,481     450,843
    Depreciation & amortization  47,407      44,043     187,196     168,880
  Total operating expenses (1)  510,030     397,008   1,647,979   1,336,515
  Operating loss               (202,331)   (139,886)   (511,437)   (403,098)
  Other income (expense):
    Interest income               2,807       3,499      14,084      21,664
    Interest expense            (28,816)    (34,958)   (116,605)   (121,304)
    Loss from de-leveraging
     transactions                  (728)    (21,443)     (3,693)   (122,189)
    Loss from impairment of
     investments                 (3,360)    (57,646)    (39,665)    (76,572)
    Equity in net loss of
     affiliate                   (3,768)     (5,286)    (16,491)    (23,229)
    Minority interest            (3,267)          -     (11,532)          -
    Other income (expense)          776         233       2,019       5,842
  Net loss before income
   taxes                       (238,687)   (255,487)   (683,320)   (718,886)
    (Provision for) benefit
     from deferred income
     taxes                         (131)     (1,237)        939          14
  Net loss                     (238,818)   (256,724)   (682,381)   (718,872)
    8.25% Series B and C
     preferred stock
     dividend requirement             -        (530)          -      (6,127)
    8.25% Series B preferred
     stock retirement loss            -           -           -        (755)
    8.25% Series C preferred
     stock retirement loss            -      (5,938)          -      (5,938)
  Net loss attributable to
   common stockholders        $(238,818)  $(263,192)  $(682,381)  $(731,692)
  Net loss per common share
   - basic and diluted           $(0.78)     $(0.90)     $(2.22)     $(2.70)
  Weighted average shares
   used in computing net
   loss per common share
   - basic and diluted      307,474,429 293,797,483 306,700,022 270,586,682

  Reconciliation of Net
   loss to Adjusted
   operating loss:
    Net loss as reported      $(238,818)  $(256,724)  $(682,381)  $(718,872)
  Add back Net loss items
   excluded from Adjusted
   operating loss:
    Interest income              (2,807)     (3,499)    (14,084)    (21,664)
    Interest expense             28,816      34,958     116,605     121,304
    Provision for (benefit
     from) deferred income taxes    131       1,237        (939)        (14)
    Loss from de-leveraging
     transactions                   728      21,443       3,693     122,189
    Loss from impairment of
     investments                  3,360      57,646      39,665      76,572
    Equity in net loss of
     affiliate                    3,768       5,286      16,491      23,229
    Minority interest             3,267           -      11,532           -
    Other (income) expense         (776)       (233)     (2,019)     (5,842)
      Operating loss           (202,331)   (139,886)   (511,437)   (403,098)
    Depreciation & amortization  47,407      44,043     187,196     168,880
    Total share-based payment
     expense                     38,001      26,024      86,199      68,046
  Adjusted operating loss (2) $(116,923)   $(69,819)  $(238,042)  $(166,172)

  Footnotes:                                Three months      Twelve months
  (1) These captions include non-cash           ended             ended
      share-based payment expense as         December 31,      December 31,
      follows:                              2007     2006     2007     2006
      (in thousands)                   (unaudited)(unaudited)

      Customer care & billing operations     $820     $615   $2,483   $1,338
      Ad sales                                514      870    1,910    2,397
      Satellite & terrestrial                 689    1,010    2,308    2,649
      Broadcast                               729    1,131    2,716    2,880
      Operations                              434      853    1,600    2,425
      Programming & content                 2,170    4,216    8,855   10,878
      Research & development                2,283    3,257    7,929    8,655
      General & administrative              5,400   10,710   26,689   28,124
      Retention & support                   2,962    3,362    9,709    8,700
      Subsidies & distribution              9,167        -    9,167        -
      Advertising & marketing              12,833        -   12,833        -
        Total share-based payment expense $38,001  $26,024  $86,199  $68,046

  (2) Adjusted operating loss is net loss before interest income, interest
      expense, income taxes, depreciation and amortization, loss from de-
      leveraging transactions, loss from impairment of investments, equity
      in net loss of affiliate, minority interest, other income (expense)
      and share-based payment expense. This non-GAAP measure should be used
      in addition to, but not as a substitute for, the analysis provided in
      the statement of operations. We believe Adjusted operating loss is a
      useful measure of our operating performance and improves comparability
      between periods. Adjusted operating loss is a significant basis used
      by management to measure our success in acquiring, retaining and
      servicing subscribers because we believe this measure provides insight
      into our ability to grow revenues in a cost-effective manner. We
      believe Adjusted operating loss is a calculation used as a basis for
      investors, analysts and credit rating agencies to evaluate and compare
      the periodic and future operating performances and value of our
      company and similar companies in our industry.

      Because we have funded the build-out of our system through the raising
      and expenditure of large amounts of capital, our results of operations
      reflect significant charges for depreciation, amortization and
      interest expense. We believe Adjusted operating loss provides helpful
      information about the operating performance of our business apart from
      the expenses associated with our physical plant or capital structure.
      We believe it is appropriate to exclude depreciation, amortization and
      interest expense due to the variability of the timing of capital
      expenditures, estimated useful lives and fluctuation in interest
      rates. We exclude income taxes due to our tax losses and timing
      differences, so that certain periods will reflect a tax benefit, while
      others an expense, neither of which is reflective of our operating
      results. Because of the variety of equity awards used by companies,
      the varying methodologies for determining share-based payment
      expense and the subjective assumptions involved in those
      determinations, we believe excluding share-based payment expense
      enhances the ability of management and investors to compare our core
      operating results with those of similar companies in our industry.

      Equity in net loss of affiliate represents our share of losses in a
      non-US affiliate in a similar business and over which we exercise
      significant influence, but do not control. Management believes it is
      appropriate to exclude this loss when evaluating the performance of
      our own operations. Additionally, we exclude loss from de-leveraging
      transactions, loss from impairment of investments, minority interest
      and other income (expense) because these items represent activity
      outside of our core business operations and can distort period to
      period comparisons of operating performance.

      There are limitations associated with the use of Adjusted operating
      loss in evaluating our company compared with net loss, which reflects
      overall financial performance. Adjusted operating loss does not
      reflect the impact on our financial results of (i) interest income,
      (ii) interest expense, (iii) income taxes, (iv) depreciation and
      amortization, (v) loss from de-leveraging transactions, (vi) loss from
      impairment of investments, (vii) equity in net loss of affiliate,
      (viii) minority interest, (ix) other income (expense) and (x) share-
      based payment expense, which are included in the computation of net
      loss. Users that wish to compare and evaluate our company based on our
      net loss should refer to our Consolidated Statements of Operations.
      Adjusted operating loss does not purport to represent operating loss
      or cash flow from operating activities, as those terms are defined
      under United States generally accepted accounting principles, and
      should not be considered as an alternative to those measurements as an
      indicator of our performance. In addition, our measure of Adjusted
      operating loss may not be comparable to similarly titled measures of
      other companies.


                                                      As of
  (in thousands)                    December 31, 2007   December 31, 2006

    Cash and cash equivalents                $156,686            $218,216
    System under construction                 151,142             126,049
    Property and equipment, net               710,370             849,662
    DARS license                              141,412             141,387
    Investments                                36,981              80,591
    Total assets                            1,609,230           1,840,618
    Total subscriber deferred revenue         514,926             427,193
    Total deferred income                     134,803             140,695
    Long-term debt, net of current portion  1,480,639           1,286,179
    Total liabilities                       2,533,787           2,238,499
    Stockholders' deficit                    (984,303)           (397,880)

                                            Three months      Twelve months
                                                ended             ended
                                             December 31,      December 31,
  SELECTED OPERATING METRICS                2007     2006     2007     2006

    Subscriber Data (in thousands,
     except percentages):
      OEM Gross Subscriber Additions (1)     766      524    2,622    2,085
      Retail Gross Subscriber
       Additions (2)                         364      540    1,269    1,781
        Total Gross Subscriber
         Additions (3)                     1,130    1,065    3,891    3,866

      OEM Net Subscriber Additions (1)       361      172    1,213      884
      Retail Net Subscriber Additions (2)     99      271      185      812
        Total Net Subscriber Additions (4)   460      443    1,398    1,696

      Conversion Rate (5)                   53.9%    52.4%    52.7%    53.3%
      Monthly Churn Rate (6)                1.72%    1.79%    1.75%    1.77%

      OEM Subscribers                      3,590    2,655    3,590    2,655
      Retail Subscribers                   4,552    4,380    4,552    4,380
      Subscribers in OEM Promotional
       Periods                               777      555      777      555
      XM Activated Vehicles with Rental
       Car Companies                          61        5       61        5
      Data Services Subscribers               46       33       46       33
        Total Ending Subscribers (7)       9,027    7,629    9,027    7,629

      Percentage of Ending Subscribers
       on Annual and Multi-Year Plans       44.8%    44.2%    44.8%    44.2%
      Percentage of Ending Subscribers
       on Family Plans                      23.6%    22.5%    23.6%    22.5%

    Revenue Data (monthly average):
      Subscription Revenue per Retail,
       OEM & Other Subscriber             $10.42   $10.26   $10.39   $10.37
      Subscription Revenue per Subscriber
       in OEM Promotional Periods          $5.97    $6.35    $6.15    $6.23
      Subscription Revenue per XM
       Activated Vehicle with Rental
       Car Companies                       $6.75    $3.10    $7.03    $5.96
      Subscription Revenue per Subscriber
       of Data Services                   $35.95   $34.33   $34.77   $31.74

      Average Monthly Subscription Revenue
       per Subscriber ("ARPU") (8)        $10.14   $10.05   $10.15   $10.09
      Net Ad Sales Revenue per Subscriber  $0.41    $0.50    $0.40    $0.43
      Activation, Merchandise and Other
       Revenue per Subscriber              $1.16    $1.16    $0.93    $0.89
        Total Revenue per Subscriber      $11.71   $11.72   $11.48   $11.41

      Expense Data:
        Subscriber Acquisition Costs
         ("SAC") (9)                         $87      $74      $75      $65
        Cost Per Gross Addition
         ("CPGA") (10)                      $140     $128     $121     $108

  (Certain totals may not add due to the effects of rounding)

  (1) OEM subscribers include subscribers in OEM promotional periods as well
      as XM activated vehicles with rental car companies.

  (2) Retail subscribers include data services subscribers.

  (3) Gross Subscriber Additions are paying subscribers newly activated in
      the reporting period.

  (4) Net Subscriber Additions represent the total net incremental paying
      subscribers added during the period (Gross Subscriber Additions less

  (5) We measure the success of these promotional programs included in our
      OEM promotional subscriber count based on the percentage of new
      promotional subscribers that elect to receive the XM service and
      convert to self-paying subscribers after the initial promotion period.
      We refer to this as the "conversion rate."

  (6) Monthly Churn Rate represents the average percentage of self-paying
      Retail, OEM & Other Subscribers that discontinued service during the
      month divided by the monthly weighted average ending subscribers.
      Monthly Churn Rate does not include OEM promotional period
      deactivations or deactivations resulting from the change-out of XM-
      enabled rental car activity.

  (7) Subscribers-Subscribers are those who are receiving and have agreed to
      pay for our service, including those who are currently in promotional
      periods paid in part by vehicle manufacturers, as well as XM activated
      radios in vehicles for which we have a contractual right to receive
      payment for the use of our service. We count radios individually as
      subscribers. Retail subscribers consist primarily of subscribers who
      purchased their radio at retail outlets, distributors, or through XM's
      direct sales efforts. OEM subscribers are self-paying subscribers
      whose XM radio was installed by an OEM and are not currently in OEM
      promotional programs. OEM promotional subscribers are subscribers who
      receive a fixed period of XM service where XM receives revenue from
      the OEM for the trial period following the initial purchase or lease
      of the vehicle. In situations where XM receives no revenue from the
      OEM during the trial period, the subscriber is not included in XM's
      subscriber count. At the time of sale, some vehicle owners receive a
      three month prepaid trial subscription. Promotional periods generally
      include the period of trial service plus 30 days to handle the receipt
      and processing of payments. The automated activation program provides
      activated XM radios on dealer lots for test drives but XM does not
      include these vehicles in its subscriber count. XM's OEM partners
      generally indicate the inclusion of three months of XM service on the
      window sticker of XM-enabled vehicles. XM, historically and including
      the 2006 model year, receives a negotiated rate for providing audio
      service to rental car companies. Beginning with the 2007 model year,
      XM entered into marketing arrangements which govern the rate which XM
      receives for providing audio service on certain rental fleet vehicles.
      Data services subscribers are those subscribers that are receiving
      services that include stand-alone XM WX Satellite Weather service,
      stand-alone XM Radio Online service and stand-alone NavTraffic
      service. Stand-alone XM WX Satellite Weather service packages range in
      price from $29.99 to $99.99 per month. Stand-alone XM Radio Online
      service is $7.99 per month. Stand-alone NavTraffic service is $9.95
      per month. XM generally charges a range of $9.99-$11.87 per month for
      its audio service for annual and multi-year plans and $6.99 per month
      for a family plan.

  (8) Subscription Revenue includes monthly subscription revenues for our
      satellite audio service and data services, net of any promotions or

  (9) SAC - Subscriber acquisition costs include Subsidies & distribution
      and the negative gross profit on merchandise revenue. Subscriber
      acquisition costs are divided by gross additions to calculate what we
      refer to as "SAC."  The previously reported amounts under the prior
      definition for the three and twelve months ended December 31, 2006
      were $74 and $64, respectively.

  (10) CPGA - CPGA costs include the amounts in SAC, as well as Advertising
      & marketing. These costs are divided by the gross additions for the
      period to calculate CPGA. CPGA costs do not include marketing staff
      (included in Retention & support) or the amortization of the GM
      guaranteed payments (included in Amortization of GM liability). The
      previously reported amounts under the prior definition for the three
      and twelve months ended December 31, 2006 were $128 and $108,
Photo: NewsCom: http://www.newscom.com/cgi-bin/prnh/20070313/XMLOGO
AP Archive: http://photoarchive.ap.org/
PRN Photo Desk, photodesk@prnewswire.com

SOURCE: XM Satellite Radio Holdings Inc.

CONTACT: Investors, Joe Wilkinson, +1-202-380-4008,
joe.wilkinson@xmradio.com or Richard Sloane, +1-202-380-1439,
richard.sloane@xmradio.com; Media, Nathaniel Brown, +1-212-708-6170,
nathaniel.brown@xmradio.com or Chance Patterson, +1-202-380-4318,
chance.patterson@xmradio.com, all of XM Satellite Radio Holdings Inc.

Web site: http://www.xmradio.com/