Investor Relations

SIRIUS Satellite Radio Reports Record Revenue for Second Quarter 2005

- Revenue Up 295% and Net Subscriber Additions Up 184% Over Prior Year Second Quarter - 2005 Year-End Subscriber Guidance Increased to 3 Million and Revenue Guidance Increased to $225 Million

NEW YORK, Aug 02, 2005 /PRNewswire-FirstCall via COMTEX/ -- SIRIUS Satellite Radio (Nasdaq: SIRI) today announced strong second quarter financial and operating results, driven by robust subscriber growth in its retail and automotive OEM distribution channels, and continued demand for its superior programming.

(Logo: http://www.newscom.com/cgi-bin/prnh/19991118/NYTH125 )

As of June 30, 2005, SIRIUS had 1,814,626 subscribers. The second quarter subscriber figure reflects net additions of 365,931 subscribers, a 184% increase over the year-ago figure of 128,678 net additions.

For the third time this year, the company is raising its 2005 year-end subscriber guidance. SIRIUS now expects to have 3 million subscribers at year-end, up from previous guidance of approximately 2.7 million subscribers. The company attributes its revised outlook to continued momentum in the retail and automotive OEM distribution channels, and expectations of strong consumer demand for SIRIUS' exclusive programming, including the NFL, Martha Stewart Living Radio and Howard Stern, as well as the continued appeal of its commercial-free music.

"Our great second quarter results clearly indicate that momentum for SIRIUS is accelerating," said Mel Karmazin, CEO of SIRIUS. "We beat Wall Street consensus expectations on all important metrics through a continuing focus on sound business execution, while maintaining low churn and very high levels of customer satisfaction. Plus, our automotive channel showed very strong results and consumers responded favorably to our second quarter retail promotion. Going into the second half of the year, we believe that creative new programming, additional automotive factory programs and the introduction of exciting new products will continue to drive our strong growth for the future."

SIRIUS reported record revenue of $52.2 million for the second quarter of 2005, a 295% increase over the $13.2 million reported for the year-ago quarter. Average monthly churn during the second quarter of 2005 was 1.4%.

The company reported subscriber acquisition costs (SAC) per gross subscriber addition of $160 for the second quarter of 2005, a 32% improvement over SAC per gross subscriber addition of $234 in the year-ago quarter.

During the second quarter of 2005, SIRIUS added 244,985 net subscribers from its retail channel, a 137% increase over 103,201 retail net additions in the year-ago quarter, and a 23% sequential increase over 198,558 retail net additions in the first quarter of 2005. The company also added 121,664 net subscribers from its automotive OEM channel, a 375% increase over 25,636 net additions from that channel in the second quarter of 2004, and a 13% sequential increase over 107,855 automotive OEM net additions in the first quarter of 2005.

SIRIUS reported a net loss of ($177.5) million, or ($0.13) per share, for the second quarter of 2005 compared with a net loss of ($136.8) million, or ($0.11) per share, for the second quarter of 2004.

During the quarter, SIRIUS and the Ford Motor Company announced an agreement that extends SIRIUS' exclusive relationship with Ford through September 2011, with the option for Ford to extend the agreement through September 2013. Ford and SIRIUS also recently announced that Ford will offer SIRIUS as a factory installed option on select vehicles beginning in August of this year. Ford and Lincoln Mercury expect to generate up to one million SIRIUS subscribers over the 2006 and 2007 model years, and expect to significantly increase factory-installed volumes in the 2008 model year. DaimlerChrysler's SIRIUS factory installation program continues to be on track, and they expect to produce more than 500,000 SIRIUS subscribers over the 2005 and 2006 model years.

SIRIUS continues to add more innovative programming to appeal to subscribers and advertisers. Beginning this month, SIRIUS will launch its second season of NFL play-by-play coverage as The Official Satellite Radio Partner of the NFL, and introduce Martha Stewart Living Radio and other new programming offerings. The company is also preparing for the arrival of Howard Stern in January 2006 and, in 2007, NASCAR.

Guidance for 2005:

Reflecting a strong first half of 2005 and the company's expectation for continued strong subscriber growth in the second half, SIRIUS is raising subscriber guidance again to a year-end 2005 target of 3 million subscribers, up from approximately 2.7 million subscribers suggested by previous guidance.

Estimated average monthly churn is expected to be 1.5% for full year 2005 compared with previous guidance of 1.5% to 1.6%, given continued high levels of customer satisfaction. The company continues to expect SAC per gross subscriber addition to be under $145 for the full year 2005, with further declines expected in 2006.

SIRIUS expects to generate $225 million of total revenue in 2005, up from previous guidance of $215 million. The company expects to report an adjusted loss from operations of approximately ($540) million in 2005 compared with previous guidance of ($510) million, reflecting the impact on total SAC of increased subscriber growth. Total operating cash uses, capital expenditures and restricted investment activity, are expected to be approximately ($375) million in 2005, in line with previous guidance.

SIRIUS ended the second quarter of 2005 with approximately $577 million in cash, cash equivalents and marketable securities, which the company continues to believe is sufficient to reach free cash flow breakeven under its current business plan. SIRIUS' first quarter of positive free cash flow could be reached as early as the fourth quarter of 2006, further underscoring its expectations to generate positive free cash flow for the full year 2007.

Conference Call Information:

SIRIUS will hold a conference call today at 8 am ET to discuss operating and financial results. The public, members of the investment community and the press will have live access to the conference call via the company's website, http://www.sirius.com, and on the SIRIUS service by tuning to SIRIUS Channel 127. A replay of the call will also be available on the SIRIUS website.

SECOND QUARTER 2005 VERSUS SECOND QUARTER 2004

For the second quarter of 2005, SIRIUS recognized total revenue of $52.2 million, compared with $13.2 million for the second quarter of 2004. This increase in revenue was driven by a net increase in the company's subscriber base of 1,334,285 subscribers from June 30, 2004 to June 30, 2005.

The company's adjusted loss from operations increased by $11.5 million to ($108.8) million in the second quarter of 2005 from ($97.3) million in the second quarter of 2004 (refer to the reconciliation table of GAAP loss from operations to adjusted loss from operations). This increase was driven by a 98%, or $34.0 million, increase in subscriber acquisition costs reflecting higher shipments of SIRIUS radios and chip sets and increased commissions to support a 190% increase in gross subscriber additions from 149,164 for the second quarter of 2004 to 432,687 for the second quarter of 2005.

Programming and content expenses increased by $5.7 million to $16.1 million for the second quarter of 2005 from $10.4 million for the second quarter of 2004. The increase was primarily attributable to an increase in costs to acquire, create and produce content, specifically costs associated with sports-related programming initiatives, such as the NBA and college sports; additional on-air talent costs due to the expansion of the programming line-up; and increased variable broadcast royalties as a result of the increase in the company's subscriber base.

Engineering, design and development expenses increased by $5.9 million to $11.8 million for the second quarter of 2005 from $5.9 million for the second quarter of 2004. The increase was primarily attributable to costs associated with tooling and manufacturing upgrades at DaimlerChrysler and Ford to support factory installations of SIRIUS radios and product development costs for the company's next generation products.

During the second quarter of 2005, the company also had increases in customer service and billing expenses and general and administrative expenses. Customer service and billing expenses increased by $3.2 million to $7.7 million for the second quarter of 2005, from $4.5 million for the second quarter of 2004. This increase was primarily a direct result of the growth in the company's subscriber base. General and administrative expenses increased by $2.8 million to $14.1 million for the second quarter of 2005 from $11.3 million for the second quarter of 2004, primarily as a result of overhead expansion to support the growth of the business.

Such increases in expenses were offset by a decrease in satellite and transmission expenses of $1.5 million, primarily as a result of the company's decision not to renew its satellite insurance policy in August 2004, and a decrease in sales and marketing expenses of $1.2 million, primarily as a result of costs associated with the commencement of the company's sales efforts with RadioShack in June 2004 and costs for its 2004 NFL marketing campaign. The decreases in sales and marketing expenses were offset by increased automotive OEM revenue share and retail residuals in the second quarter of 2005 due to the increase in subscribers and higher personnel- related costs to support the growth of the company.

SIRIUS reported a net loss of ($177.5) million, or ($0.13) per share, for the second quarter of 2005 compared with a net loss of ($136.8) million, or ($0.11) per share, for the second quarter of 2004.

SIX MONTHS ENDED JUNE 30, 2005 VERSUS SIX MONTHS ENDED JUNE 30, 2004

For the six months ended June 30, 2005, SIRIUS recognized total revenue of $95.4 million compared with $22.5 million for the six months ended June 30, 2004, a 324% year-over-year increase. This increase in revenue was driven by a net increase in the company's subscriber base of 1,334,285 subscribers from June 30, 2004 to June 30, 2005.

The company's adjusted loss from operations increased by $60.5 million to ($235.8) million for the six months ended June 30, 2005 from ($175.3) million for the six months ended June 30, 2004 (refer to the reconciliation table of GAAP loss from operations to adjusted loss from operations). This increase was driven by a 120%, or $74.1 million, increase in subscriber acquisition costs reflecting higher shipments of SIRIUS radios and chip sets and increased commissions to support a 205% increase in gross subscriber additions from 257,896 for the six months ended June 30, 2004 to 787,395 for the six months ended June 30, 2005.

Programming and content expenses increased by $21.5 million to $40.6 million for the six months ended June 30, 2005 from $19.1 million for the six months ended June 30, 2004. The increase was primarily attributable to an increase in costs to create, produce and acquire content, such as the NFL, NBA and college sports; additional on-air talent costs due to the expansion of the programming line-up; and increased variable broadcast royalties as a result of the increase in the company's subscriber base.

Customer service and billing expenses increased by $8.8 million to $17.2 million for the six months ended June 30, 2005 from $8.4 million for the six months ended June 30, 2004. The increase was a direct result of the growth in the company's subscriber base and additional costs associated with a new billing system.

Sales and marketing expenses increased by $8.0 million to $68.8 million for the six months ended June 30, 2005 from $60.8 million for the six months ended June 30, 2004. The increase was primarily a result of increased automotive OEM revenue share and retail residuals as a result of the increase in subscribers and additional personnel-related costs to support the growth of the company. In addition, the company incurred higher overall distribution costs in the first half of 2005 to support the expansion of the retail distribution channel, offset in part by costs associated with the commencement of the company's sales efforts with RadioShack in June 2004.

General and administrative expenses increased by $9.8 million to $29.0 million for the six months ended June 30, 2005 from $19.2 million for the six months ended June 30, 2004 primarily as a result of overhead expansion to support the growth of the business. In addition, engineering, design and development expenses increased by $11.8 million to $23.4 million for the six months ended June 30, 2005 from $11.6 million for the six months ended June 30, 2004 primarily as a result of additional personnel-related costs to support research and development efforts, costs associated with tooling and manufacturing upgrades at DaimlerChrysler and Ford to support factory installations of SIRIUS radios and product development costs for the company's next generation products.

SIRIUS reported a net loss of ($371.2) million, or ($0.28) per share, for the six months ended June 30, 2005 compared with a net loss of ($280.9) million, or ($0.23) per share, for the six months ended June 30, 2004.

(Selected financial information follows).

SIRIUS defines adjusted loss from operations as GAAP loss from operations before depreciation and equity granted to third parties and employees. SIRIUS believes adjusted loss from operations is useful to investors because it represents operating expenses of the company excluding the effects of non-cash items.

SIRIUS defines average monthly revenue per subscriber, or ARPU, as the total earned subscriber revenue and net advertising revenue divided by the daily weighted average number of subscribers for the period.

SIRIUS defines subscriber acquisition costs, or SAC, per gross subscriber addition as SAC and the negative margin from the direct sale of SIRIUS radios and accessories divided by the number of gross subscriber additions for the period.

Adjusted loss from operations, ARPU and SAC per gross subscriber addition are not measures of financial performance under U.S. generally accepted accounting principles and are used as measures of operating performance. As a result, these metrics 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 or as a substitute for measures of performance prepared in accordance with U.S. generally accepted accounting principles.

Sirius Satellite Radio Inc.
     Quarterly Data
     (Unaudited)

                                                         As of June 30,
                                                      2005           2004
    Subscribers:
    Beginning subscribers                          1,448,695        351,663
    Net additions                                    365,931        128,678
    Ending subscribers                             1,814,626        480,341
        Retail (1)                                 1,354,798        400,429
        OEM (1)                                      432,988         55,065
        Hertz                                         26,840         24,847

    (1)  Retail subscribers include special markets subscribers. All
         subscriber figures from the prior period have been reclassified to
         conform to the current period presentation.


                          For the Three Months Ended  For the Six Months Ended
                                  June 30,                    June 30,
                              2005            2004       2005         2004

    Gross subscriber
     additions              432,687         149,164    787,395      257,896
    Deactivated
     subscribers             66,756          20,486    116,027       38,616
    Average monthly
     churn (1)                  1.4%            1.6%       1.3%         1.8%
    Subscriber acquisition
     costs per gross
     subscriber addition       $160            $234       $173         $240
    Monthly ARPU:
       Average monthly
        subscriber revenue
        per subscriber
        before effects of
        Hertz subscribers
        and mail-in
        rebates              $10.60          $11.19     $10.61       $11.35
       Effects of Hertz
        subscribers            0.05           (0.29)      0.03        (0.38)
       Effects of mail-in
        rebates               (0.37)          (0.36)     (0.23)       (0.70)
       Average monthly
        subscriber revenue
        per subscriber        10.28           10.54      10.41        10.27
       Average monthly
        net advertising
        revenue per
        subscriber             0.22            0.11       0.18         0.07
       ARPU                  $10.50          $10.65     $10.59       $10.34


    (1)  Average monthly churn is the number of deactivated subscribers
         divided by average quarterly subscribers.



     Sirius Satellite Radio Inc.
     Financial Highlights
     (In thousands, except per share data)
     (Unaudited)

                               For the Three Months        For the Six Months
                                  Ended June 30,              Ended June 30,
                               2005            2004        2005         2004
    Revenue:
      Subscriber revenue,
       including effects
       of mail-in
       rebates               $49,622         $12,950     $91,526      $22,152
      Advertising revenue,
       net of agency fees      1,052             130       1,586          150
      Equipment revenue        1,503             140       2,270          190
      Other revenue               17              10          28           29
    Total revenue             52,194          13,230      95,410       22,521


    Operating expenses:
      Cost of services
       (excludes
       depreciation shown
       separately below):
         Satellite and
          transmission         6,668           8,183      13,481       16,595
         Programming and
          content             16,147          10,405      40,635       19,095
         Customer service
          and billing          7,738           4,529      17,230        8,389
         Cost of equipment     1,952             405       2,928          469
      Sales and marketing     33,862          35,066      68,774       60,748
      Subscriber
       acquisition costs      68,693          34,711     135,786       61,692
      General and
       administrative         14,120          11,332      28,952       19,201
      Engineering, design
       and development        11,786           5,917      23,448       11,646
      Depreciation            24,580          23,583      49,081       47,271
      Equity granted to
       third parties and
       employees (1)          41,230          12,084      79,936       29,908
    Total operating
     expenses                226,776         146,215     460,251      275,014
      Loss from
       operations           (174,582)       (132,985)   (364,841)    (252,493)
    Other income (expense):
      Interest and
       investment income       4,790           1,946       9,277        3,615
      Interest expense        (7,201)         (5,269)    (14,526)     (28,968)
      Other income                 7              71          52           71
    Total other income
     (expense)                (2,404)         (3,252)     (5,197)     (25,282)
      Loss before
       income taxes         (176,986)       (136,237)   (370,038)    (277,775)
      Income tax expense        (560)           (560)     (1,120)      (3,081)
         Net loss          $(177,546)      $(136,797)  $(371,158)   $(280,856)
    Net loss per share
     (basic and diluted)      $(0.13)         $(0.11)     $(0.28)      $(0.23)
    Weighted average
     common shares
     outstanding
     (basic and diluted)   1,324,270       1,235,920   1,319,318    1,226,764

    (1)  Allocation of equity granted to third parties and employees to other
         operating expenses:

    Satellite and
     transmission               $429            $171        $988         $595
    Programming and content    5,098           1,046      10,005        2,877
    Customer service and
     billing                     126              46         265          132
    Sales and marketing        7,228           3,380      20,639       15,383
    Subscriber acquisition
     costs                    12,533           3,965      18,761        4,067
    General and
     administrative            8,332           2,907      15,609        5,256
    Engineering, design
     and development           7,484             569      13,669        1,598
         Total equity granted
          to third parties
          and employees      $41,230         $12,084     $79,936      $29,908



     Sirius Satellite Radio Inc.
     Financial Highlights
     (In thousands)
     (Unaudited)

    Selected balance sheet data:
                                                       As of
                                        June 30, 2005        December 31, 2004

    Cash, cash equivalents and
     marketable securities                  $577,369                 $759,168
    Restricted investments                    92,615                   97,321
    Working capital                          306,384                  541,526
    Total assets                           1,741,534                1,957,613
    Long-term debt                           654,307                  656,274
    Total liabilities                      1,024,483                  956,980
    Accumulated deficit                   (2,237,014)              (1,865,856)
    Stockholders' equity                     717,051                1,000,633

The following table reconciles GAAP loss from operations, as reported, to adjusted loss from operations:

For the Three Months Ended   For the Six Months Ended
                                  June 30,                   June 30,
                            2005          2004         2005            2004

    GAAP loss from
     operations,
     as reported       $(174,582)     $(132,985)   $(364,841)      $(252,493)
       Depreciation       24,580         23,583       49,081          47,271
       Equity granted
        to third parties
        and employees     41,230         12,084       79,936          29,908
    Adjusted loss
     from operations   $(108,772)      $(97,318)   $(235,824)      $(175,314)



     Sirius Satellite Radio Inc.
     Financial Highlights
     (In thousands)
     (Unaudited)

                              For the Three Months         For the Six Months
                                 Ended June 30,              Ended June 30,
                               2005          2004        2005           2004

    Cash flows from
     operating activities:
       Net loss            $(177,546)    $(136,797)  $(371,158)     $(280,856)
       Adjustments to
        reconcile net
        loss to net cash
        used in operating
        activities:
         Depreciation         24,580        23,583      49,081         47,271
         Non-cash
          interest expense       761           573       1,523         20,595
         Loss on disposal
          of assets              125             -         252             19
         Expense for equity
          granted to third
          parties and
          employees           41,230        12,084      79,936         29,908
         Deferred income
          taxes                  560           560       1,120          3,081
       Changes in operating
        assets and
        liabilities:

         Marketable
          securities               -             -          16            (92)
         Prepaid expenses
          and other
          current assets     (13,656)        4,666     (15,761)           (29)
         Other long-term
          assets               1,635        (2,446)        478         (3,414)
         Accrued interest     (2,862)         (868)       (126)         2,876
         Accounts payable
          and accrued
          expenses            31,840        26,852      26,002         29,473
        Deferred revenue      30,714         9,473      50,374         17,968
        Other long-term
         liabilities          (2,018)         (983)     (3,542)        (1,974)
           Net cash used
            in operating
            activities       (64,637)      (63,303)   (181,805)      (135,174)
    Cash flows from
     investing activities:
       Additions to
        property and
        equipment             (3,975)       (7,390)    (10,863)       (10,340)
       Sale of property
        and equipment             47             -          59             28
       Purchase of
        restricted
        investments                -             -      (6,291)       (85,000)
       Release of
        restricted
        investments           10,997             -      10,997              -
       Maturities of
        available-for-
        sale securities            -             -       4,835         25,000
           Net cash
            provided by
            (used in)
            investing
            activities         7,069        (7,390)     (1,263)       (70,312)
    Cash flows from
     financing activities:
       Proceeds from
        issuance of
        long-term debt, net        -             -           -        293,600
       Proceeds from
        exercise of
        stock options          5,111         3,694       6,104          5,147
       Proceeds from
        exercise of
        warrants                   -             -           -         19,850
       Other                       -           (34)         (8)           (67)
            Net cash
             provided by
             financing
             activities        5,111         3,660       6,096        318,530
    Net (decrease) increase
     in cash and cash
     equivalents             (52,457)      (67,033)   (176,972)       113,044
    Cash and cash equivalents
     at the beginning
     of period               629,376       701,056     753,891        520,979
    Cash and cash equivalents
     at the end of period   $576,919      $634,023    $576,919       $634,023


    E-SIRI

    Contacts for SIRIUS:

     Jim Collins
     Media
     212-901-6422
     jcollins@siriusradio.com

     Michelle McKinnon
     Analysts
     212-584-5285
     mmckinnon@siriusradio.com

     Jaymie VanValkenburgh
     Investors
     212-584-5158
     jvanvalkenburgh@siriusradio.com


    About SIRIUS

SIRIUS delivers more than 120 channels of the best commercial-free music, compelling talk shows, news and information, and the most exciting sports programming to listeners across the country in digital quality sound. SIRIUS offers 65 channels of 100% commercial-free music, and features over 55 channels of sports, news, talk, entertainment, traffic and weather for a monthly subscription fee of only $12.95. SIRIUS also broadcasts live play-by- play games of the NFL and NBA, and is the Official Satellite Radio partner of the NFL.

SIRIUS radios for the car, truck, home, RV and boat are manufactured by Alpine, Audiovox, Blaupunkt, Clarion, Delphi, Jensen, JVC, Kenwood, Pioneer, Sanyo and XACT Communications. Available in more than 25,000 retail locations, SIRIUS radios can be purchased at major retailers including Best Buy, Circuit City, Crutchfield, Office Depot, Sears, Target, Wal-Mart and RadioShack. SIRIUS is also available at heavy truck dealers and truck stops nationwide.

SIRIUS radios are currently offered in vehicles from Audi, BMW, Chrysler, Dodge, Ford, Infiniti, Jeep(R), Land Rover, Lexus, Lincoln-Mercury, Mazda, Mercedes-Benz, MINI, Nissan, Scion, Toyota, Porsche, Volkswagen and Volvo. Hertz currently offers SIRIUS at major locations around the country.

Click on http://www.sirius.com to listen to SIRIUS live, or to find a SIRIUS retailer or car dealer in your area.

Any statements that express, or involve discussions as to, expectations, beliefs, plans, objectives, assumptions, future events or performance with respect to SIRIUS Satellite Radio Inc. are not historical facts and may be forward-looking and, accordingly, such statements involve estimates, assumptions and uncertainties which could cause actual results to differ materially from those expressed in any forward-looking statements. Accordingly, any such statements are qualified in their entirety by reference to the factors discussed in our Annual Report on Form 10-K for the year ended December 31, 2004 filed with the Securities and Exchange Commission. Among the key factors that have a direct bearing on our operational results are: our dependence upon third parties, including manufacturers of SIRIUS radios, retailers, automakers and programming partners, our competitive position and any events which affect the useful life of our satellites.

SOURCE SIRIUS Satellite Radio

Jim Collins, Media, +1-212-901-6422, jcollins@siriusradio.com, or Michelle McKinnon,
Analysts, +1-212-584-5285, mmckinnon@siriusradio.com, or Jaymie VanValkenburgh,
Investors, +1-212-584-5158, jvanvalkenburgh@siriusradio.com, all of SIRIUS Satellite
Radio
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