Investor Relations

SIRIUS Satellite Radio Reports Record Subscriber Growth and Revenue for Fourth Quarter and Full-Year 2005

- Subscribers Increased 190% to Over 3.3 Million at Year-End 2005 - Satellite Radio Market Share Leader For Fourth Quarter 2005 - 2005 Revenue Grew 262% to Over $242 Million - More Than 6 Million Subscribers Expected by Year-End 2006 - Company Provides Additional 2006 Full-Year Guidance and 2010 Outlook

Feb 17, 2006 /PRNewswire-FirstCall via COMTEX News Network/ -- SIRIUS Satellite Radio (Nasdaq: SIRI) today announced record fourth quarter and full-year 2005 financial and operating results, driven by better-than-expected subscriber growth across its distribution channels.

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

SIRIUS ended 2005 with 3,316,560 subscribers, reflecting a 190% increase in total subscribers for the year and record net subscriber additions of 2,173,302. For the fourth quarter, the company added 1,142,640 net subscribers, making SIRIUS the market share leader in terms of net satellite radio subscriber additions for the quarter. This was the best quarterly gain in the company's history, and a 138% increase over net subscriber additions in the year-ago quarter. SIRIUS' market share of satellite radio net subscriber additions was approximately 45% for full-year 2005 and approximately 56% for the fourth quarter.

Full-year 2005 revenue grew to $242.2 million, up 262% from $66.9 million in 2004, and ahead of guidance for the year. Average monthly churn for the fourth quarter and full-year 2005 was 1.5%, in line with guidance. Subscriber acquisition costs (SAC) per gross subscriber addition was $113 for the fourth quarter and $139 for full-year 2005, a 21% improvement over the full-year 2004 level and ahead of guidance of under $145 for 2005.

"2005 was our best year ever and a major milestone for SIRIUS, setting new records in subscribers, market share and revenue," said Mel Karmazin, CEO of SIRIUS. "We continue to be the fastest growing U.S. provider in this exciting new entertainment category, with strong growth driven by tremendous demand for our products and our programming, including the NFL, Martha Stewart and Howard Stern. In 2006, we believe this positive momentum will be further reflected in our automotive OEM channel, where we expect to more than double our subscriber base."

During 2005, SIRIUS added 1,554,108 net subscribers from its retail channel, a 123% increase from 696,028 net retail subscriber additions in 2004. The company also added 620,224 net subscribers from its automotive OEM channel, more than 241% above net automotive OEM subscriber additions of 181,646 in 2004. For the fourth quarter, SIRIUS added 900,645 net subscribers from its retail channel and 241,705 net subscribers from its automotive OEM channel.

SIRIUS reported a net loss of ($311.4) million, or ($0.23) per share, for the fourth quarter of 2005, and a net loss of ($863.0) million, or ($0.65) per share, for the full-year.

2005 Achievements

During the year, SIRIUS achieved significant operational milestones including the following:

* Satellite radio market share parity in the retail channel -- retail
       market share of 55% for the full-year and 61% for the fourth quarter,
       according to The NPD Group

     * Rapid acceleration in OEM subscriber additions, with further
       acceleration expected in 2006

     * Material reduction in SAC per gross subscriber addition, with further
       improvements expected in 2006 and beyond

     * Long-term exclusive agreements extended with SIRIUS' automotive OEM
       partners DaimlerChrysler (Chrysler and Mercedes-Benz), Ford and BMW

     * Exciting new programming exclusives with Martha Stewart, Richard
       Simmons, the NBA, Adam Curry's Podcast Show, Howard Stern (January
       2006) and NASCAR (2007)

     * Introduced the critically acclaimed SIRIUS S50, the satellite radio
       industry's first wearable device with MP3/WMA capabilities

     * Launched SIRIUS Music on the Sprint wireless network, a satellite radio
       industry first

     * Launched satellite radio service in Canada through SIRIUS' Canadian
       affiliate, SIRIUS Canada Inc.

     * Enhanced balance sheet and liquidity through a successful $500 million
       debt offering

     * Key senior management additions in marketing, advertising sales,
       retail, business development and investor relations areas

    Guidance

SIRIUS believes that the satellite radio industry will continue to experience strong growth in 2006, and the company expects to have over 6 million subscribers by the end of this year.

Average monthly churn is expected to be approximately 1.8% for 2006. The company expects SAC per gross subscriber addition to approach $110 for the full-year 2006 and to decline further in 2007.

SIRIUS expects to generate approximately $600 million of total revenue in 2006, and approximately $1 billion in 2007. SIRIUS expects an adjusted loss from operations of approximately $540 million in 2006.

SIRIUS ended the fourth quarter of 2005 with approximately $879 million in cash, cash equivalents and marketable securities. SIRIUS' first quarter of positive free cash flow, after capital expenditures, could be reached as early as the fourth quarter of 2006, and the company continues to expect to generate positive free cash flow for the full-year 2007.

The company expects capital expenditures to be approximately $110 million in 2006, which includes investments for new revenue generating opportunities such as telematics, video and other data services, as well as network infrastructure expansion, including payments related to the previously disclosed contract to secure a slot for a possible satellite launch prior to year-end 2010.

SIRIUS also believes that in 2010 the company will generate approximately $3 billion in revenue and approximately $1 billion in free cash flow, after capital expenditures.

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 125. A replay of the call will also be available on the SIRIUS website.

FOURTH QUARTER 2005 VERSUS FOURTH QUARTER 2004

For the fourth quarter of 2005, SIRIUS recognized total revenue of $80.0 million compared with $25.2 million for the fourth quarter of 2004. This increase in revenue was driven by a net increase of 2,173,302 subscribers from December 31, 2004 to December 31, 2005.

The company's adjusted loss from operations increased by $71.1 million to ($226.3) million for the fourth quarter of 2005 from ($155.2) million for the fourth quarter of 2004 (refer to the reconciliation table of GAAP loss from operations to adjusted loss from operations). This increase was driven by a 124%, or $80.2 million, increase in subscriber acquisition costs reflecting higher shipments of SIRIUS radios and chip sets and increased commissions to support a 143% increase in gross subscriber additions from 521,479 for the fourth quarter of 2004 to 1,266,674 for the fourth quarter of 2005, offset by reductions in hardware subsidy rates as the company continued to reduce manufacturing and chip set costs. The increase in subscriber acquisition costs was offset by a 199%, or $45.1 million, increase in subscriber revenue as a result of a 190% increase in the company's subscriber base.

Programming and content expenses increased by $9.2 million to $35.0 million for the fourth quarter of 2005 from $25.8 million for the fourth quarter of 2004. The increase was primarily attributable to license fees associated with new content agreements, broadcast royalties as a result of the increase in the company's subscriber base and compensation related costs for expansion of the programming lineup.

Customer service and billing expenses increased by $11.4 million to $20.0 million for the fourth quarter of 2005 from $8.6 million for the fourth quarter of 2004. The increase was primarily attributable to call center operating costs necessary to accommodate the increase in the subscriber base. Customer service and billing expenses per average subscriber per month declined 25% to $2.66 for the fourth quarter of 2005 from $3.56 for the fourth quarter of 2004.

Sales and marketing expenses increased by $12.2 million to $63.0 million for the fourth quarter of 2005 from $50.8 million for the fourth quarter of 2004. The increase was primarily attributable to higher costs associated with advertising, distribution and revenue share.

During the fourth quarter of 2005, the company also had increases in general and administrative expenses and engineering, design and development expenses. General and administrative expenses increased $3.9 million to $16.9 million for the fourth quarter of 2005 from $13.0 million for the fourth quarter of 2004 primarily as a result of overhead expansion to support the growth of the business. Engineering, design and development expenses increased $3.1 million to $11.5 million for the fourth quarter of 2005 from $8.4 million for the fourth quarter of 2004 primarily as a result of development costs for the company's next generation of products, offset by decreases in costs associated with OEM tooling and manufacturing upgrades.

For the fourth quarter of 2005, the company recorded $6.2 million for its share of SIRIUS Canada Inc.'s net loss.

SIRIUS reported a net loss of ($311.4) million, or ($0.23) per share, for the fourth quarter of 2005 compared with a net loss of ($261.9) million, or ($0.21) per share, for the fourth quarter of 2004.

YEAR ENDED DECEMBER 31, 2005 VERSUS YEAR ENDED DECEMBER 31, 2004

For the year ended December 31, 2005, SIRIUS recognized total revenue of $242.2 million compared with $66.9 million for the year ended December 31, 2004. This increase in revenue was driven by a net increase of 2,173,302 subscribers from December 31, 2004 to December 31, 2005.

The company's adjusted loss from operations increased by $111.3 million to ($567.5) million for the year ended December 31, 2005 from ($456.2) million for the year ended December 31, 2004 (refer to the reconciliation table of GAAP loss from operations to adjusted loss from operations). This increase was driven by a 101%, or $175.9 million, increase in subscriber acquisition costs reflecting higher shipments of SIRIUS radios and chip sets and increased commissions to support a 155% increase in gross subscriber additions from 986,556 for the year ended December 31, 2004 to 2,519,301 for the year ended December 31, 2005, offset by reductions in average subsidy rates as the company continued to reduce manufacturing and chip set costs. The increase in subscriber acquisition costs was offset by a 256%, or $160.7 million, increase in subscriber revenue as a result of a 190% increase in the company's subscriber base.

Programming and content expenses increased by $35.2 million to $98.6 million for the year ended December 31, 2005 from $63.4 million for the year ended December 31, 2004. The increase was primarily attributable to license fees associated with new content agreements, broadcast royalties as a result of the increase in the company's subscriber base and compensation related costs for expansion of the programming lineup.

Customer service and billing expenses increased by $24.3 million to $46.6 million for the year ended December 31, 2005 from $22.3 million for the year ended December 31, 2004. The increase was primarily attributable to call center operating costs necessary to accommodate the increase in the subscriber base. Customer care and billing expenses per average subscriber per month declined 41% to $2.10 for the year ended December 31, 2005 from $3.56 for the year ended December 31, 2004.

Sales and marketing expenses increased by $16.1 million to $170.6 million for the year ended December 31, 2005 from $154.5 million for the year ended December 31, 2004. The increase was primarily attributable to higher costs associated with advertising, distribution, residuals and revenue share. Such increases were offset in part by decreases in certain retail costs associated with sales efforts for the RadioShack rollout in 2004. Compensation related costs also increased as a result of additions to headcount to support the growth of the company.

During the year ended December 31, 2005, the company also had increases in general and administrative expenses and engineering, design and development expenses. General and administrative expenses increased $15.8 million to $59.8 million for the year ended December 31, 2005 from $44.0 million for the year ended December 31, 2004 primarily as a result of overhead expansion to support the growth of the business. Engineering, design and development expenses increased $14.2 million to $44.7 million for the year ended December 31, 2005 from $30.5 million for the year ended December 31, 2004 primarily as a result of additional personnel-related costs to support research and development efforts, costs associated with OEM tooling and manufacturing upgrades and development costs for the company's next generation of radios. Increases in engineering, design and development expenses were offset by lower chip set development costs.

Increases in operating expenses were offset by a decrease in satellite and transmission expenses of $3.3 million to $27.9 million for the year ended December 31, 2005 from $31.2 million for the year ended December 31, 2004. Such decrease was primarily a result of the company's decision not to renew its satellite insurance policy in August 2004, offset in part by an increase in personnel-related costs.

For the year ended December 31, 2005, the company recorded $6.9 million for its share of SIRIUS Canada Inc.'s net loss. In addition, the company recorded a $6.2 million loss from the redemption of its 15% Senior Secured Discount Notes due 2007 and 14 1/2% Senior Secured Notes due 2009.

SIRIUS reported a net loss of ($863.0) million, or ($0.65) per share, for the year ended December 31, 2005 compared with a net loss of ($712.2) million, or ($0.57) per share, for the year ended December 31, 2004.

(Selected financial information follows).

SIRIUS defines average monthly churn as the number of deactivated subscribers divided by average quarterly subscribers.

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

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 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 because it represents operating expenses of the company excluding the effects of non-cash items.

Average monthly churn, SAC per gross subscriber addition, ARPU and adjusted loss from operations are not measures of financial performance under U.S. generally accepted accounting principles and are used by SIRIUS 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 financial performance prepared in accordance with U.S. generally accepted accounting principles.

Sirius Satellite Radio Inc.
    Subscriber Data and Metrics
    (Unaudited)

                                                       As of December 31,
                                                      2005           2004
    Subscribers:
    Beginning subscribers                          1,143,258        261,061
    Net additions                                  2,173,302        882,197
    Ending subscribers                             3,316,560      1,143,258
      Retail                                       2,465,363        911,255
      OEM                                            823,693        203,469
      Hertz                                           27,504         28,534



                                For the Three Months       For the Years
                                  Ended December 31,     Ended December 31,
                                   2005     2004         2005         2004

    Gross subscriber additions   1,266,674  521,479   2,519,301      986,556
    Deactivated subscribers        124,034   40,510     345,999      104,359
    Average monthly churn              1.5%     1.5%        1.5%         1.6%
    Subscriber acquisition
     costs per gross subscriber
     addition                         $113     $124        $139         $177
    Monthly ARPU:
      Average monthly subscriber
       revenue per subscriber
       before effects of Hertz
       subscribers and mail-in
       rebates                      $10.76   $10.57      $10.78       $10.91
      Effects of Hertz subscribers    0.03    (0.05)       0.04        (0.19)
      Effects of mail-in rebates     (1.77)   (1.16)      (0.76)       (0.70)
      Average monthly subscriber
       revenue per subscriber         9.02     9.36       10.06        10.02
      Average monthly net
       advertising revenue per
       subscriber                     0.40     0.21        0.28         0.14
      ARPU                           $9.42    $9.57      $10.34       $10.16



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

                                    For the Three Months     For the Years
                                     Ended December 31,    Ended December 31,
                                      2005       2004      2005        2004
    Revenue:

      Subscriber revenue,
       including effects of
       mail-in rebates               $67,816    $22,704   $223,615    $62,881
      Advertising revenue, net
       of agency fees
                                       3,037        507      6,131        906
      Equipment revenue                8,971      1,885     12,271      2,898
      Other revenue                      180        121        228        169
    Total revenue                     80,004     25,217    242,245     66,854

    Operating expenses:
      Cost of services (excludes
       depreciation shown separately
       below):
        Satellite and transmission     7,147      6,942     27,856     31,157
        Programming and content       35,018     25,803     98,607     63,353
        Customer service and billing  20,007      8,623     46,653     22,341
        Cost of equipment              7,446      1,852     11,827      3,467
      Sales and marketing             63,049     50,825    170,592    154,495
      Subscriber acquisition costs   145,180     64,944    349,641    173,702
      General and administrative      16,913     13,019     59,831     44,028
      Engineering, design and
       development                    11,513      8,430     44,745     30,520
      Depreciation                    24,915     24,288     98,555     95,370
      Equity granted to third
       parties and employees (1)      46,196     79,065    163,078    126,725
    Total operating expenses         377,384    283,791  1,071,385    745,158
      Loss from operations          (297,380)  (258,574)  (829,140)  (678,304)
    Other income (expense):
      Interest and investment income   9,956      3,807     26,878      9,713
      Interest expense               (17,142)    (7,151)   (45,361)   (41,386)
      Loss from redemption of debt         -          -     (6,214)         -
      Income (expense) from affiliate (6,199)         -     (6,938)         -
      Other income                         7        605         89      2,016
    Total other income (expense)     (13,378)    (2,739)   (31,546)   (29,657)
      Loss before income taxes      (310,758)  (261,313)  (860,686)  (707,961)
      Income tax expense                (631)      (560)    (2,311)    (4,201)
        Net loss                   $(311,389) $(261,873) $(862,997) $(712,162)
    Net loss per share
     (basic and diluted)              $(0.23)    $(0.21)    $(0.65)    $(0.57)
    Weighted average common shares
     outstanding (basic and
     diluted)                      1,335,650  1,263,710  1,325,739  1,238,585


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

    Satellite and transmission          $487     $1,244     $1,942     $2,041
    Programming and content            4,676     15,502     19,469     23,899
    Customer service and billing         144        254        549        439
    Sales and marketing               11,801     26,724     42,149     48,353
    Subscriber acquisition costs      18,594     26,052     49,709     33,149
    General and administrative         5,978      6,462     27,724     13,877
    Engineering, design and
     development                       4,516      2,827     21,536      4,967
      Total equity granted to third
       parties and employees         $46,196    $79,065   $163,078   $126,725



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

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

    Cash, cash equivalents and
     marketable securities                     $879,257           $759,168
    Restricted investments                      107,615             97,321
    Working capital                             404,481            541,526
    Total assets                              2,085,362          1,957,613
    Long-term debt                            1,084,437            656,274
    Total liabilities                         1,760,394            956,980
    Accumulated deficit                      (2,728,853)        (1,865,856)
    Stockholders' equity                        324,968          1,000,633

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

For the Three Months     For the Years
                                     Ended December 31,   Ended December 31,
                                      2005       2004      2005       2004

    GAAP loss from operations,
     as reported                  $(297,380) $(258,574) $(829,140) $(678,304)
      Depreciation                   24,915     24,288     98,555     95,370
      Equity granted to third
       parties and employees         46,196     79,065    163,078    126,725
    Adjusted loss from operations $(226,269) $(155,221) $(567,507) $(456,209)



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

                                    For the Three Months     For the Years
                                      Ended December 31,   Ended December 31,
                                       2005       2004       2005       2004

    Cash flows from operating
     activities:
      Net loss                     $(311,389) $(261,873) $(862,997) $(712,162)
      Adjustments to reconcile
       net loss to net cash used
       in operating activities:
        Depreciation                  24,915     24,288     98,555     95,370
        Non-cash interest expense        804        744      3,169     21,912
        Provision for doubtful
         accounts                      1,017        627      4,311      1,648
        Non-cash income (expense)
         from affiliate                2,777          -      3,192          -
        Non-cash loss from
         redemption of debt                -          -        712          -
        Loss on disposal of assets       742         51      1,028         70
        Equity granted to third
         parties and employees        46,196     79,065    163,078    126,725
        Deferred income taxes            631        560      2,311      4,201
      Changes in operating assets
       and liabilities:

        Marketable securities              -       (200)        16       (292)
        Accounts receivable          (18,984)    (4,649)   (28,440)    (7,684)
        Inventory                       (916)     5,503     (6,329)    (1,850)
        Prepaid expenses and other
         current assets              (14,517)    (7,134)   (29,129)    (5,636)
        Other long-term assets         3,760    (41,157)     6,476    (44,563)
        Accounts payable and
         accrued expenses            108,721     63,790    145,052    108,511
        Accrued interest              11,472        841     17,813      4,689
        Deferred revenue             129,142     45,235    210,947     78,541
        Other long-term liabilities       17     (4,634)    (3,505)    (3,943)
          Net cash used in operating
           activities                (15,612)   (98,943)  (273,740)  (334,463)
    Cash flows from investing
     activities:
      Additions to property and
       equipment                     (31,939)    (6,273)   (49,888)   (28,589)
      Sales of property and
       equipment                           7        206         72        443
      Purchases of restricted
       investments                   (15,000)         -    (21,291)   (89,706)
      Release of restricted
       investments                         -        398     10,997          -
      Purchases of available-for-sale
       securities                    (20,200)         -   (148,900)         -
      Sales of available-for-sale
       securities                     26,750          -     31,850          -
      Maturities of available-for-sale
       securities                        250          -      5,085     25,000
          Net cash used in investing
           activities                (40,132)    (5,669)  (172,075)   (92,852
    Cash flows from financing
     activities:
      Proceeds from issuance of
       common stock, net                   -     96,025          -     96,025
      Proceeds from issuance of
       long-term debt, net                 -    224,813    493,005    518,413
      Redemption of debt                   -          -    (57,609)         -
      Proceeds from exercise of
       stock options                   7,418     20,047     18,543     26,051
      Proceeds from exercise of
       warrants                            -          -          -     19,850
      Other                                -        (13)        (8)      (112)
          Net cash provided by
           financing activities        7,418    340,872    453,931    660,227
    Net (decrease) increase in cash
     and cash equivalents            (48,326)   236,260      8,116    232,912
    Cash and cash equivalents at
     the beginning of period         810,333    517,631    753,891    520,979
    Cash and cash equivalents at
     the end of period              $762,007   $753,891   $762,007   $753,891


    About SIRIUS

SIRIUS delivers more than 125 channels of the best commercial-free music, compelling talk shows, news and information, and the most extensive sports programming to listeners across the country in digital quality sound. SIRIUS offers 68 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 is the Official Satellite Radio Partner of the NFL, NBA and NHL and broadcasts live play-by-play games of the NFL, NBA and NHL.

SIRIUS products for the car, truck, home, RV and boat are distributed by Alpine, Audiovox, Brix Group, Clarion, Delphi, Directed Electronics, Eclipse, Jensen, JVC, Kenwood, Magnadyne, Monster Cable, Pioneer, Russound, Tivoli 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, Costco, Target, Wal-Mart, Sam's Club, RadioShack and at shop.sirius.com.

SIRIUS radios are currently offered in vehicles from Audi, BMW, Chrysler, Dodge, Ford, Infiniti, Jaguar, 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.

E-SIRI

    Contacts:

    Media

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

    Analysts

    Paul Blalock
    SIRIUS
    212-584-5174
    pblalock@siriusradio.com

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

SOURCE SIRIUS Satellite Radio

Media - Jim Collins, +1-212-901-6422, jcollins@siriusradio.com, or Analysts - Paul
Blalock, +1-212-584-5174, pblalock@siriusradio.com, or Michelle McKinnon,
+1-212-584-5285, mmckinnon@siriusradio.com, all of SIRIUS Satellite Radio
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