Investor Relations

SIRIUS Reports Strong Third Quarter 2007 Results

  • Revenue Up 45% to $241.8 Million
  • Record 3Q Net Subscriber Additions of 524,938, up 19%
  • Subscribers Up 50% From a Year Ago to Approximately 7.7 Million
  • Company Reiterates Subscriber and Financial Guidance

NEW YORK, Oct 30, 2007 /PRNewswire-FirstCall via COMTEX News Network/ -- SIRIUS Satellite Radio (Nasdaq: SIRI) today announced strong third quarter results, including a 45% increase in revenue from the year ago quarter to $241.8 million, and strong subscriber growth of 524,938 net additions during the quarter, driving ending subscribers up 50% from a year ago to approximately 7.7 million.

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

"SIRIUS again posted solid results," said Mel Karmazin, CEO of SIRIUS. "Strong demand for the SIRIUS service drove robust subscriber growth and, when coupled with a continuing focus on cost control, allowed SIRIUS to significantly reduce our net loss and places us on-track to achieve our financial goals. We expect strong holiday season sales and we are targeting positive free cash flow for the fourth quarter of 2007."

SIRIUS ended third quarter 2007 with 7,667,476 subscribers, a 50% increase from third quarter 2006 ending subscribers of 5,119,308. SIRIUS added 524,938 net subscribers during the quarter, comprised of 64,101 net additions from the retail and aftermarket channels and 460,837 from the OEM channel. In the third quarter 2007, SIRIUS captured 63% of satellite radio segment share, marking the eighth consecutive quarter of leadership in satellite radio subscriber growth.

Total revenue for the third quarter of 2007 increased to a record $241.8 million, up 45% from $167.1 million for the year-ago third quarter. Advertising revenue was $8.5 million in the third quarter of 2007 and average monthly revenue per subscriber (or "ARPU") was $10.71. SAC per gross subscriber addition was $103 for the third quarter of 2007 compared to $114 for the year-ago third quarter. The monthly average all-in customer churn rate was 2.1% in the third quarter 2007.

SIRIUS' net loss improved by 26% to ($120.1) million, or ($0.08) per share, for the third quarter of 2007, from ($162.9) million, or ($0.12) per share, for third quarter 2006. The adjusted loss from operations for third quarter 2007 improved 32% to ($56.9) million from ($83.2) million for third quarter 2006.

    2007 OUTLOOK
    SIRIUS today issued the following guidance for the full year 2007:

    -- Total revenue approaching $1 billion
    -- More than 8 million subscribers at year-end
    -- Average monthly subscriber churn of approximately 2.2%-2.4%
    -- SAC per gross subscriber addition approaching $100

PENDING MERGER WITH XM; SPECIAL MEETING OF STOCKHOLDERS

"Momentum for the pending merger with XM continues to build," said Karmazin. "The public interest benefits and enhanced consumer choice that will come from the merger have garnered clear support from our customers, suppliers and other groups representing a diverse cross-section of Americans. Nearly all of the opposition to our proposed merger has been generated by those who fear enhanced competition. We will continue to work with the FCC and the DOJ to make the case that the merger offers more choices, including a la carte offerings, and lower prices for subscribers, and we continue to expect that the merger will be completed by year-end."

A special meeting of stockholders of SIRIUS Satellite Radio is scheduled to be held in The Auditorium at the Equitable Center, 787 Seventh Avenue, New York, New York 10019, on November 13, 2007 at 9:00 a.m. The vote of each SIRIUS stockholder is very important and the merger with XM cannot be completed unless SIRIUS stockholders approve the amendment to SIRIUS' certificate of incorporation and the issuance of SIRIUS capital stock in connection with the merger. Information about the meeting, the merger and other business to be considered by stockholders is contained in the Proxy Statement mailed to stockholders on or about October 9, 2007. Stockholders are urged to read the Proxy Statement carefully.

RESULTS OF OPERATIONS

The discussion of operating expenses below excludes the effects of stock- based compensation. SIRIUS believes this presentation improves the transparency of disclosure and is consistent with the way operating results are evaluated by management.

THIRD QUARTER 2007 VERSUS THIRD QUARTER 2006

For the third quarter of 2007, SIRIUS recognized total revenue of $241.8 million compared to $167.1 million for the third quarter of 2006. This 44.7%, or $74.7 million, increase in revenue was driven by a $71.5 million increase in subscriber revenue resulting from the net increase in subscribers of 2,548,168 from the third quarter of 2006.

The company's adjusted loss from operations decreased $26.3 million to ($56.9) million for the third quarter of 2007 from ($83.2) million for the third quarter of 2006 (refer to the reconciliation table of net loss to adjusted loss from operations). This decrease was driven by the increase in total revenue of $74.7 million, which more than offset the $48.4 million increase in expenses.

Satellite and transmission expenses decreased $0.2 million to $6.9 million for third quarter 2007 compared to $7.1 million for third quarter 2006.

Programming and content expenses increased $8.3 million to $56.3 million for the third quarter of 2007 from $48.0 million for the third quarter of 2006. The increase was primarily attributable to license fees associated with new programming agreements and compensation-related costs.

Revenue share and royalties increased $14.6 million, or 79.3%, to $33.0 million for third quarter 2007 from $18.4 million for third quarter 2006. The increase was primarily attributable to growth in the company's revenues, increased broadcast royalties, as well as an increase in the company's OEM subscriber base.

Customer service and billing expenses increased $4.3 million to $20.9 million for the third quarter of 2007 from $16.6 million for the third quarter of 2006. The increase was primarily attributable to higher call center operating costs necessary to accommodate the increase in the company's subscriber base. Customer service and billing expenses per average subscriber per month declined 16.6% to $0.95 for the third quarter of 2007 from $1.14 for the third quarter of 2006.

Sales and marketing expenses decreased $1.5 million to $29.5 million for the third quarter 2007 from $31.0 million for third quarter 2006. This decrease was primarily attributable to lower consumer marketing and advertising compared to the year-ago third quarter.

Subscriber acquisition costs (SAC) increased $20.1 million, or 24.9%, to $101.0 million for the third quarter of 2007 from $80.9 million for the third quarter of 2006. This increase was primarily attributable to higher total hardware and chipset subsidies driven by higher gross subscriber additions.

SAC per gross subscriber addition decreased 9.6% to $103 for the third quarter of 2007 from $114 for the third quarter of 2006 driven by lower product costs, offset by a higher mix of OEM gross additions.

General and administrative expenses increased $12.3 million to $33.9 million for third quarter 2007 from $21.6 million for third quarter 2006. The increase was primarily the result of higher legal fees and compensation- related costs.

Engineering, design and development expenses decreased $11.7 million to $8.8 million for the third quarter of 2007 from $20.5 million for the third quarter of 2006. This decrease was primarily attributable to reduced OEM tooling and manufacturing upgrades associated with the factory installation of SIRIUS radios in additional vehicle models.

SIRIUS reported a net loss of ($120.1) million, or ($0.08) per share, for the third quarter of 2007 compared to a net loss of ($162.9) million, or ($0.12) per share, for the third quarter of 2006. The adjusted net loss per share, or net loss per share excluding stock-based compensation, was ($0.06) per share for the third quarter of 2007 as compared to an adjusted net loss per share of ($0.09) per share for the third quarter of 2006 (refer to the reconciliation table of net loss per share to adjusted net loss per share).

NINE MONTHS ENDED SEPTEMBER 30, 2007 VERSUS NINE MONTHS ENDED SEPTEMBER 30, 2006

For the nine months ended September 30, 2007, SIRIUS recognized total revenue of $672.3 million compared with $443.9 million for the nine months ended September 30, 2006. This 51.5%, or $228.4 million, increase in revenue was primarily driven by a $219.1 million increase in subscriber revenue resulting from the net increase in subscribers of 2,548,168 from the end of the third quarter 2006.

The company's adjusted loss from operations decreased ($126.1) million to ($220.2) million for the nine months ended September 30, 2007 from ($346.3) million for the nine months ended September 30, 2006 (refer to the reconciliation table of net loss to adjusted loss from operations). This decrease was driven by a 51.5%, or $228.4 million, increase in total revenue which more than offset the 12.9%, or $102.3 million, increase in expenses.

Satellite and transmission expenses decreased $11.2 million to $20.9 million for the nine months ended September 30, 2007 from $32.1 million for the nine months ended September 30, 2006. The 2006 expenses include a $10.9 million non-recurring impairment charge associated with certain satellite long-lead time parts that were no longer needed.

Programming and content expenses increased $23.6 million to $166.5 million for the nine months ended September 30, 2007 from $142.9 million for the nine months ended September 30, 2006. The increase was primarily attributable to license fees associated with new programming agreements and compensation- related costs.

Revenue share and royalties increased $41.1 million, or 84.0%, to $90.0 million for nine months ended September 30, 2007 from $48.9 million for nine months ended September 30, 2006. The increase was primarily attributable to the growth in the company's revenues and an increase in the company's OEM subscriber base.

Customer service and billing expenses increased $14.1 million to $64.0 million for the nine months ended September 30, 2007 from $49.9 million for the nine months ended September 30, 2006. The increase was primarily attributable to higher call center operating costs necessary to accommodate the increase in the company's subscriber base. Customer service and billing expenses per average subscriber per month declined 18.8% to $1.04 for the nine months ended September 30, 2007 from $1.28 for the nine months ended September 30, 2006.

Sales and marketing expenses decreased $6.2 million to $104.8 million for the nine months ended September 30, 2007 from $111.0 million for the nine months ended September 30, 2006. This decrease was primarily attributable to lower consumer marketing and advertising and reduced cooperative marketing spend with the company's distributors offset by higher compensation-related costs.

Subscriber acquisition costs increased $6.2 million to $304.9 million for the nine months ended September 30, 2007 from $298.7 million for the nine months ended September 30, 2006. This increase was primarily attributable to higher OEM hardware subsidies, offset by reduced manufacturing and chipset costs.

SAC per gross subscriber addition decreased 11.8% to $105 for the nine months ended September 30, 2007 from $119 for the nine months ended September 30, 2006 driven by lower product costs, offset by a higher mix of OEM gross additions.

General and administrative expenses increased $26.0 million to $84.6 million for the nine months ended September 30, 2007 from $58.6 million for the nine months ended September 30, 2006. The increase was primarily a result of higher legal fees and compensation-related costs.

Engineering, design and development expenses decreased $15.6 million to $30.4 million for the nine months ended September 30, 2007 from $46.0 million for the nine months ended September 30, 2006. This decrease was primarily attributable to reduced OEM tooling and manufacturing upgrades associated with the factory installation of SIRIUS radios in additional vehicle models offset by higher compensation-related costs.

SIRIUS reported a net loss of ($399.0) million, or ($0.27) per share, for the nine months ended September 30, 2007, including a ($0.04) per share impact from stock-based compensation, compared with a net loss of ($859.3) million, or ($0.61) per share, for the nine months ended September 30, 2006, including a ($0.01) per share impact from the impairment loss and ($0.28) per share impact from stock-based compensation. The adjusted net loss per share, or net loss per share excluding stock-based compensation, was ($0.23) for the nine months ended September 30, 2007 compared with an adjusted net loss per share excluding the impairment loss and stock based compensation of ($0.32) for the nine months ended September 30, 2006 (refer to the reconciliation table of net loss per share to adjusted net loss per share).



                 SIRIUS SATELLITE RADIO INC. AND SUBSIDIARIES
                               SUBSCRIBER DATA, METRICS
                         AND OTHER NON-GAAP FINANCIAL MEASURES
                    (Dollars in thousands, unless otherwise stated)
                                      (Unaudited)

        Subscribers Data:
                                   For the Three Months  For the Nine Months
                                   Ended September 30,   Ended September 30,
                                     2007       2006       2007       2006
         Beginning subscribers     7,142,538  4,678,207  6,024,555  3,316,560
         Net additions               524,938    441,101  1,642,921  1,802,748
           Ending subscribers      7,667,476  5,119,308  7,667,476  5,119,308

           Retail                  4,428,747  3,482,514  4,428,747  3,482,514
           OEM                     3,221,388  1,610,074  3,221,388  1,610,074
           Hertz                      17,341     26,720     17,341     26,720
         Ending subscribers        7,667,476  5,119,308  7,667,476  5,119,308

           Retail                     64,101    205,899    386,922  1,017,151
           OEM                       462,749    236,464  1,262,378    786,381
           Hertz                      (1,912)    (1,262)    (6,379)      (784)
         Net additions               524,938    441,101  1,642,921  1,802,748

         Metrics:
                                   For the Three Months  For the Nine Months
                                   Ended September 30,   Ended September 30,
                                      2007       2006       2007       2006
         Gross subscriber additions  999,284    732,406  2,989,887  2,523,587
         Deactivated subscribers     474,346    291,305  1,346,966    720,839
         Average monthly churn (1)(6)   2.1%       2.0%       2.2%       1.8%
         SAC per gross subscriber
          addition (2)(6)               $103       $114       $105       $119
         Customer service and
          billing expenses per
          average subscriber (3)(6)    $0.95      $1.14      $1.04      $1.28
         Total revenue              $241,786   $167,113   $672,250   $443,855
         Free cash flow (4)(6)      $(67,799) $(232,356) $(294,545) $(531,124)

         Monthly ARPU:
           Average monthly
            subscriber revenue per
            subscriber before the
            effects of Hertz
            subscribers and
            mail-in rebates           $10.29     $10.73     $10.27     $10.69
           Effects of Hertz
            subscribers                 0.06       0.07       0.05       0.05
           Effects of mail-in rebates  (0.03)     (0.12)     (0.09)     (0.27)
           Average monthly
            subscriber revenue per
            subscriber                 10.32      10.68      10.23      10.47
           Average monthly net
            advertising revenue
            per subscriber              0.39       0.49       0.40       0.58
           ARPU                       $10.71     $11.17     $10.63     $11.05


                 SIRIUS SATELLITE RADIO INC. AND SUBSIDIARIES
                           SUBSCRIBER DATA, METRICS
              AND OTHER NON-GAAP FINANCIAL MEASURES - CONTINUED
               (Dollars in thousands, unless otherwise stated)
                                 (Unaudited)

         Adjusted Loss from Operations:
                                   For the Three Months  For the Nine Months
                                   Ended September 30,   Ended September 30,
                                      2007       2006       2007       2006
          Net loss                 $(120,137) $(162,898) $(399,029) $(859,270)
            Impairment loss              -          -          -       10,917
            Depreciation              26,072     27,583     79,142     78,254
            Stock-based compensation  22,727     43,418     64,004    395,293
            Other income and expense  13,891      8,166     34,028     26,566
            Income tax expense           555        578      1,665      1,909
            Adjusted loss from
             operations (7)         $(56,892)  $(83,153) $(220,190) $(346,331)


          Adjusted Net Loss and
           Adjusted Net Loss per
           Share:
                                   For the Three Months  For the Nine Months
                                   Ended September 30,   Ended September 30,
                                      2007       2006       2007       2006
          Net loss                 $(120,137) $(162,898) $(399,029) $(859,270)
            Impairment loss              -          -          -       10,917
            Stock-based compensation  22,727     43,418     64,004    395,293
          Adjusted net loss         $(97,410) $(119,480) $(335,025) $(453,060)
          Net loss per share
           (basic and diluted)        $(0.08)    $(0.12)    $(0.27)    $(0.61)
            Impairment loss              -          -          -         0.01
            Stock-based compensation    0.02       0.03       0.04       0.28
          Adjusted net loss per share
           (basic and diluted) (8)    $(0.06)    $(0.09)    $(0.23)    $(0.32)
          Weighted average common
           shares outstanding
            (basic and diluted)    1,464,147  1,405,281  1,461,200  1,398,829


                 SIRIUS SATELLITE RADIO INC. AND SUBSIDIARIES
                                SUBSCRIBER DATA, METRICS
                    AND OTHER NON-GAAP FINANCIAL MEASURES - CONTINUED
                     (Dollars in thousands, unless otherwise stated)
                                       (Unaudited)

         Condensed Consolidated Statements of Operations:

                                   For the Three Months  For the Nine Months
                                   Ended September 30,   Ended September 30,
                                      2007       2006       2007       2006
          Total revenue             $241,786   $167,113   $672,250   $443,855
          Operating expenses
           (excludes depreciation
           and stock-based
           compensation shown
           separately below):
            Satellite and transmission 6,852      7,090     20,898     32,077
            Programming and content   56,308     48,039    166,467    142,871
            Revenue share and
             royalties                32,978     18,371     89,953     48,856
            Customer service and
             billing                  20,892     16,625     63,986     49,905
            Cost of equipment          8,460      6,196     26,388     13,128
            Sales and marketing       29,539     30,981    104,822    111,024
            Subscriber acquisition
             costs                   100,998     80,863    304,893    298,670
            General and
             administrative           33,884     21,610     84,595     58,627
            Engineering, design
             and development           8,767     20,491     30,438     45,945
            Depreciation              26,072     27,583     79,142     78,254
            Stock-based compensation  22,727     43,418     64,004    395,293
          Total operating expenses   347,477    321,267  1,035,586  1,274,650
          Loss from operations      (105,691)  (154,154)  (363,336)  (830,795)
            Other expense            (13,891)    (8,166)   (34,028)   (26,566)
          Loss before income taxes  (119,582)  (162,320)  (397,364)  (857,361)
            Income tax expense          (555)      (578)    (1,665)    (1,909)
          Net loss                 $(120,137) $(162,898) $(399,029) $(859,270)


                   SIRIUS SATELLITE RADIO INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                 (Dollars in thousands, except per share amounts)
                                   (Unaudited)

                                   For the Three Months  For the Nine Months
                                   Ended September 30,   Ended September 30,
                                      2007       2006       2007       2006
     Revenue:
       Subscriber revenue,
        including effects of mail-
        in rebates                  $226,844   $155,372   $627,275   $408,194
       Advertising revenue, net of
        agency fees                    8,524      7,130     24,422     22,593
       Equipment revenue               6,290      3,579     17,216     10,367
       Other revenue                     128      1,032      3,337      2,701
     Total revenue                   241,786    167,113    672,250    443,855
     Operating expenses (excludes
      depreciation shown
      separately below) (1):
       Cost of services:
         Satellite and transmission    7,409      7,580     22,732     34,279
         Programming and content      59,015     71,654    173,324    440,010
         Revenue share and royalties  32,978     18,371     89,953     48,856
         Customer service and billing 21,058     16,822     64,529     50,550
         Cost of equipment             8,460      6,196     26,388     13,128
       Sales and marketing            36,114     38,590    119,890    125,902
       Subscriber acquisition costs  101,798     79,812    307,580    329,418
       General and administrative     44,837     33,146    118,651     97,574
       Engineering, design and
        development                    9,736     21,513     33,397     56,679
       Depreciation                   26,072     27,583     79,142     78,254
     Total operating expenses        347,477    321,267  1,035,586  1,274,650
       Loss from operations         (105,691)  (154,154)  (363,336)  (830,795)
     Other income (expense):
       Interest and investment income  5,604      7,750     16,399     26,560
       Interest expense, net of
        amounts capitalized          (19,499)   (15,921)   (50,441)   (48,705)
       Equity in net loss of
        affiliate                        -          -          -       (4,445)
       Other income                        4          5         14         24
     Total other expense             (13,891)    (8,166)   (34,028)   (26,566)
       Loss before income taxes     (119,582)  (162,320)  (397,364)  (857,361)
       Income tax expense               (555)      (578)    (1,665)    (1,909)
         Net loss                  $(120,137) $(162,898) $(399,029) $(859,270)
     Net loss per share (basic and
      diluted)                        $(0.08)    $(0.12)    $(0.27)    $(0.61)
     Weighted average common
      shares outstanding (basic
      and diluted)                 1,464,147  1,405,281  1,461,200  1,398,829

     (1) Amounts related to stock-
      based compensation included
      in other operating expenses
      were as follows:
     Satellite and transmission         $557       $490     $1,834     $2,202
     Programming and content           2,707     23,615      6,857    297,139
     Customer service and billing        166        197        543        645
     Sales and marketing               6,575      7,609     15,068     14,878
     Subscriber acquisition costs        800     (1,051)     2,687     30,748
     General and administrative       10,953     11,536     34,056     38,947
     Engineering, design and
      development                        969      1,022      2,959     10,734
     Total equity granted to third
      parties and employees          $22,727    $43,418    $64,004   $395,293


                       SIRIUS SATELLITE RADIO INC. AND SUBSIDIARIES
                                    BALANCE SHEET DATA
                                  (Dollars in thousands)

                                                          As of
                                         September 30, 2007  December 31, 2006
                                            (Unaudited)
             Cash, cash equivalents and
              marketable securities               $362,368         $408,921
             Restricted investments                 53,010           77,850
             Working capital                      (261,893)        (257,799)
             Total assets                        1,587,128        1,658,528
             Long-term debt                      1,281,742        1,068,249
             Total liabilities                   2,227,641        2,047,599
             Accumulated deficit                (4,232,749)      (3,833,720)
             Stockholders' deficit                (640,513)        (389,071)


                 SIRIUS SATELLITE RADIO INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                              (Dollars in thousands)
                                   (Unaudited)

                                    For the Three Months  For the Nine Months
                                    Ended September 30,   Ended September 30,
                                       2007       2006      2007       2006
     Cash flows from operating
      activities:
       Net loss                     $(120,137) (162,898) $(399,029) $(859,270)
       Adjustments to reconcile net
        loss to net cash used in
        operating activities:
         Depreciation                  26,072    27,583     79,142     78,254
         Non-cash interest expense        893       785      2,452      2,332
         Provision for doubtful
          accounts                      2,309     1,907      6,663      5,687
         Non-cash equity in net
          loss of affiliate               -         -          -        4,445
         (Gain) loss on disposal of
          assets                          (14)      348         92        889
         Impairment loss                  -         -          -       10,917
         Stock-based compensation      22,727    43,418     64,004    395,293
         Deferred income taxes            555       578      1,665      1,909
       Changes in operating assets
        and liabilities:
         Accounts receivable           (1,237)     (276)    (6,627)     8,710
         Inventory                      4,902   (19,869)    (2,533)   (30,723)
         Receivables from
          distributors                  4,480    13,658     (9,032)     7,835
         Prepaid expenses and other
          current assets                4,992   (12,740)    14,571    (42,399)
         Other long-term assets           (46)    3,414    (14,825)   (21,674)
         Accounts payable and
          accrued expenses             (7,602)  (52,794)   (58,713)   (68,780)
         Accrued interest              (8,529)  (11,620)    (7,826)   (10,460)
         Deferred revenue              16,534     1,822     76,803     75,669
         Other long-term
          liabilities                  (8,486)  (16,646)       759     (8,051)
           Net cash used in
            operating activities      (62,587) (183,330)  (252,434)  (449,417)
     Cash flows from investing
      activities:
       Additions to property and
        equipment                     (30,212)  (66,588)   (66,801)   (94,368)
       Sales of property and
        equipment                          19       -          116        123
       Purchases of restricted and
        other investments                 -      (7,438)      (310)   (12,339)
       Release of restricted
        investments                    25,000    25,000     25,000     25,000
       Purchases of available-for-
        sale securities                   -     (10,000)       -     (118,500)
       Sales of available-for-sale
        securities                         (4)   24,215     10,842    201,340
           Net cash (used in)
            provided by investing
            activities                 (5,197)  (34,811)   (31,153)     1,256
     Cash flows from financing
      activities:
       Long term borrowings, net of
        related costs                     -         -      245,199        -
       Proceeds from exercise of
        stock options                     745     1,054      2,677      4,030
           Net cash provided by
            financing activities          745     1,054    247,876      4,030
     Net decrease in cash and cash
      equivalents                     (67,039) (217,087)   (35,711)  (444,131)
     Cash and cash equivalents at
      the beginning of period         424,749   534,963    393,421    762,007
     Cash and cash equivalents at
      the end of period              $357,710  $317,876   $357,710   $317,876


    FOOTNOTES TO PRESS RELEASE AND TABLES FOR NON-GAAP FINANCIAL MEASURES

This press release, including the selected financial information above, includes the following non-GAAP financial measures: average monthly churn; SAC per gross subscriber addition; customer service and billing expenses per average subscriber; free cash flow; average monthly revenue per subscriber, or ARPU; adjusted loss from operations; adjusted net loss; and adjusted net loss per share. The definitions and usefulness of such non-GAAP financial measures are as follows (dollars in thousands, unless otherwise stated):

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


    (2) SIRIUS defines SAC per gross subscriber addition as subscriber
        acquisition costs, excluding stock-based compensation, and margins
        from the direct sale of SIRIUS radios and accessories divided by the
        number of gross subscriber additions for the period. SAC per gross
        subscriber addition is calculated as follows:

                                   For the Three Months  For the Nine Months
                                   Ended September 30,   Ended September 30,
                                      2007       2006       2007       2006
          Subscriber acquisition
           costs                    $101,798    $79,812   $307,580   $329,418
          Less:  stock-based
           compensation                 (800)     1,051     (2,687)   (30,748)
          Add:  margin from direct
           sales of SIRIUS radios
           and accessories             2,170      2,617      9,172      2,761
          SAC                       $103,168    $83,480   $314,065   $301,431
          Gross subscriber
           additions                 999,284    732,406  2,989,887  2,523,587
          SAC per gross subscriber
           addition                     $103       $114       $105       $119


    (3) SIRIUS defines customer service and billing expenses per average
        subscriber as total customer service and billing expenses, excluding
        stock-based compensation, divided by the daily weighted average number
        of subscribers for the period. Customer service and billing expenses
        per average subscriber is calculated as follows:

                                   For the Three Months  For the Nine Months
                                   Ended September 30,   Ended September 30,
                                       2007       2006      2007       2006

          Customer service and
           billing expenses          $21,058    $16,822    $64,529    $50,550
          Less:  stock-based
           compensation                 (166)      (197)      (543)      (645)
          Customer service and
           billing expenses,
           as adjusted               $20,892    $16,625    $63,986    $49,905
          Daily weighted average
           number of subscribers   7,326,029  4,848,293  6,814,796  4,332,332
          Customer service and
           billing expenses,
           as adjusted, per
           average subscriber          $0.95      $1.14      $1.04      $1.28


    (4) SIRIUS defines free cash flow as cash flow from operating activities,
        capital expenditures and restricted and other investment activity.
        Free cash flow is calculated as follows:

                                   For the Three Months  For the Nine Months
                                   Ended September 30,   Ended September 30,
                                       2007       2006       2007      2006
         Net cash used in
          operating activities      $(62,576) $(183,330) $(252,423) $(449,417)
         Additions to property and
          equipment                  (30,212)   (66,588)   (66,801)   (94,368)
         Restricted and other
          investment activity         25,000     17,562     24,690     12,661
         Free cash flow             $(67,788) $(232,356) $(294,534) $(531,124)


    (5) SIRIUS defines ARPU as the total earned subscriber revenue and net
        advertising revenue divided by the daily weighted average number of
        subscribers for the period. ARPU is calculated as follows:

                                   For the Three Months  For the Nine Months
                                   Ended September 30,   Ended September 30,
                                       2007       2006       2007       2006
         Subscriber revenue         $226,844   $155,372   $627,275   $408,194
         Net advertising revenue       8,524      7,130     24,422     22,593
         Total subscriber and net
          advertising revenue       $235,368   $162,502   $651,697   $430,787
         Daily weighted average
          number of subscribers    7,326,029  4,848,293  6,814,796  4,332,332
         ARPU                         $10.71     $11.17     $10.63     $11.05


    (6) SIRIUS believes average monthly churn; SAC per gross subscriber
        addition; customer service and billing expenses per average
        subscriber; free cash flow; and ARPU provide meaningful information
        regarding operating performance and liquidity and are used for
        internal management purposes; when publicly providing the business
        outlook; as a means to evaluate period-to-period comparisons; and to
        compare the company's performance to that of its competitors. SIRIUS
        also believes that investors use current and projected metrics to
        monitor performance of the business and make investment decisions.

        SIRIUS believes the exclusion of stock-based compensation expense in
        the calculations of SAC per gross subscriber addition and 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 SIRIUS common stock, the effect of which is
        unrelated to the operational conditions that give rise to variations
        in the components of subscriber acquisition costs and customer service
        and billing expenses. Specifically, the exclusion of stock-based
        compensation expense in the calculation of SAC per gross subscriber
        addition is critical in being able to understand the economic impact
        of the direct costs incurred to acquire a subscriber and the effect
        over time as economies of scale are reached.

        These non-GAAP financial measures are used in addition to and in
        conjunction with results presented in accordance with GAAP. These non-
        GAAP financial measures 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 for, or superior
        to measures of financial performance prepared in accordance with GAAP.


    (7) SIRIUS refers to net loss before taxes; other income (expense) -
        including interest and investment income, interest expense, equity in
        net loss of affiliate; depreciation; impairment charges; and stock-
        based compensation expense as adjusted loss from operations. Adjusted
        loss from operations is not a measure of financial performance under
        GAAP. The company believes adjusted loss from operations is a useful
        measure of its operating performance. The company uses adjusted loss
        from operations for budgetary and planning purposes; to assess the
        relative profitability and on-going performance of consolidated
        operations; to compare performance from period to period; and to
        compare performance to that of its competitors. The company also
        believes adjusted loss from operations is useful to investors to
        compare operating performance to the performance of other
        communications, entertainment and media companies. The company
        believes that investors use current and projected adjusted loss from
        operations to estimate the current or prospective enterprise value and
        make investment decisions.

        Because the company funds and builds-out its satellite radio system
        through the periodic raising and expenditure of large amounts of
        capital, results of operations reflect significant charges for
        interest and depreciation expense. The company believes adjusted loss
        from operations provides useful information about the operating
        performance of the business apart from the costs associated with the
        capital structure and physical plant. The exclusion of interest
        expense and depreciation is useful given fluctuations in interest
        rates and significant variation in depreciation expense that can
        result from the amount and timing of capital expenditures and
        potential variations in estimated useful lives, all of which can vary
        widely across different industries or among companies within the same
        industry. The company believes the exclusion of taxes is appropriate
        for comparability purposes as the tax positions of companies can vary
        because of their differing abilities to take advantage of tax benefits
        and because of the tax policies of the various jurisdictions in which
        they operate. The company also believes the exclusion of stock-based
        compensation expense is useful given the significant variation in
        expense that can result from changes in the fair market value of the
        company's common stock. Finally, the company believes that the
        exclusion of equity in net loss of affiliate (SIRIUS Canada, Inc.) is
        useful to assess the performance of its core consolidated operations
        in the continental United States. To compensate for the exclusion of
        taxes, other income (expense), depreciation, impairment charges and
        stock-based compensation expense, the company separately measures and
        budgets for these items.

        There are material limitations associated with the use of adjusted
        loss from operations in evaluating the company compared with net loss,
        which reflects overall financial performance, including the effects of
        taxes, other income (expense), depreciation, impairment charges and
        stock-based compensation expense. The company uses adjusted loss from
        operations to supplement GAAP results to provide a more complete
        understanding of the factors and trends affecting the business than
        GAAP results alone. Investors that wish to compare and evaluate the
        operating results after giving effect for these costs, should refer to
        net loss as disclosed in the unaudited consolidated statements of
        operations. Since adjusted loss from operations is a non-GAAP
        financial measure, the calculation of adjusted loss from operations
        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 in accordance with GAAP.


    (8) SIRIUS refers to adjusted net loss and adjusted net loss per share as
        net loss per share excluding impairment charges and stock-based
        compensation expense. Adjusted net loss and adjusted net loss per
        share are not measures of financial performance under GAAP. The
        company believes adjusted net loss and adjusted net loss per share are
        useful to investors to compare its operating performance to the
        performance of other communications, entertainment and media
        companies. The company believes the exclusion of impairment charges is
        appropriate for comparability purposes as the existence, amount and
        timing of impairment charges can vary from period to period and can
        vary widely across different industries or among companies within the
        same industry. The company also believes the exclusion of stock-based
        compensation expense is useful given the significant variation in
        expense that can result from changes in the fair market value of the
        company's common stock.

        There are material limitations associated with the use of adjusted net
        loss and adjusted net loss per share in evaluating the company
        compared with net loss and net loss per share, which reflects overall
        financial performance, including the effects of impairment charges and
        stock-based compensation expense. The company uses adjusted net loss
        and adjusted net loss per share to supplement GAAP results to provide
        a more complete understanding of the factors and trends affecting the
        business than GAAP results alone. Investors that wish to compare and
        evaluate the operating results after giving effect for these costs,
        should refer to net loss and net loss per share as disclosed in the
        unaudited consolidated financial statements of operations. Since
        adjusted net loss and adjusted net loss per share are non-GAAP
        financial measures, the calculation of adjusted net loss and adjusted
        net loss per share 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.


About SIRIUS

SIRIUS, "The Best Radio on Radio," delivers more than 130 channels of the best programming in all of radio. SIRIUS is the original and only home of 100% commercial free music channels in satellite radio, offering 69 music channels. SIRIUS also delivers 65 channels of sports, news, talk, entertainment, traffic, weather and data. SIRIUS is the Official Satellite Radio Partner of the NFL, NASCAR and NBA, and broadcasts live play-by-play games of the NFL and NBA, as well as live NASCAR races. All SIRIUS programming is available for a monthly subscription fee of only $12.95.

SIRIUS Internet Radio (SIR) is a CD-quality, Internet-only version of the SIRIUS radio service, without the use of a radio, for the monthly subscription fee of $12.95. SIR delivers more than 80 channels of talk, entertainment, sports, and 100% commercial free music.

SIRIUS Backseat TV(TM) is the first ever live in-vehicle rear seat entertainment featuring three channels of children's TV programming, including Nickelodeon, Disney Channel and Cartoon Network, for the subscription fee of $6.99 plus applicable audio subscription fee.

SIRIUS products for the car, truck, home, RV and boat are available in more than 20,000 retail locations, including Best Buy, Circuit City, Crutchfield, Costco, Target, Wal-Mart, Sam's Club, RadioShack and at shop.sirius.com.

SIRIUS radios are offered in vehicles from Audi, Bentley, BMW, Chrysler, Dodge, Ford, Infiniti, Jaguar, Jeep(R), Land Rover, Lexus, Lincoln, Mercury, Maybach, Mazda, Mercedes-Benz, MINI, Mitsubishi, Nissan, Rolls Royce, Scion, Toyota, Volkswagen, and Volvo. Hertz also offers SIRIUS in its rental cars at major locations around the country.

Click on www.sirius.com to listen to SIRIUS live, or to purchase a SIRIUS radio and subscription.

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 the benefits of the business combination transaction involving Sirius Satellite Radio Inc. and XM Satellite Radio Holdings Inc., including potential synergies and cost savings and the timing thereof, future financial and operating results, the combined company's plans, objectives, expectations and intentions with respect to future operations, products and services; and other statements identified by words such as "anticipate," "believe," "plan," "estimate," "expect," "intend," "will," "should," "may," or words of similar meaning. Such forward- looking statements are based upon the current beliefs and expectations of SIRIUS' and XM's management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are difficult to predict and generally beyond the control of SIRIUS and XM. 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 statement: general business and economic conditions; the performance of financial markets and interest rates; the ability to obtain governmental approvals of the transaction on a timely basis; the failure of SIRIUS and XM stockholders to approve the transaction; the failure to realize synergies and cost-savings from the transaction or delay in realization thereof; the businesses of SIRIUS and XM may not be combined successfully, or such combination may take longer, be more difficult, time-consuming or costly to accomplish than expected; and operating costs and business disruption following the merger, including adverse effects on employee retention and on our business relationships with third parties, including manufacturers of radios, retailers, automakers and programming providers. Additional factors that could cause SIRIUS' and XM's results to differ materially from those described in the forward-looking statements can be found in SIRIUS' and XM's Annual Reports on Form 10-K for the year ended December 31, 2006, and Quarterly Reports on Form 10-Q for the quarters ended March 31, 2007 and June 30, 2007, which are 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 SIRIUS and XM disclaim any intention or obligation to update any forward looking statements as a result of developments occurring after the date of this communication.

Important Additional Information Will be Filed with the SEC

This communication is being made in respect of the proposed business combination involving SIRIUS and XM. In connection with the proposed transaction, SIRIUS has filed with the SEC a Registration Statement on Form S- 4 containing a Joint Proxy Statement/Prospectus and each of SIRIUS and XM may file with the SEC other documents regarding the proposed transaction. The Joint Proxy Statement/Prospectus has been mailed to stockholders of SIRIUS and XM. INVESTORS AND SECURITY HOLDERS OF SIRIUS AND XM ARE URGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS AS WELL AS OTHER DOCUMENTS THAT MAY BE FILED WITH THE SEC CAREFULLY IN THEIR ENTIRETY BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION.

Investors and security holders can obtain free copies of the Registration Statement and the Joint Proxy Statement/Prospectus and other documents filed with the SEC by SIRIUS and XM through the web site maintained by the SEC at www.sec.gov. Free copies of the Registration Statement and the Joint Proxy Statement/Prospectus and other documents filed with the SEC can also be obtained by directing a request to Sirius Satellite Radio Inc., 1221 Avenue of the Americas, 36th Floor, New York, NY 10020, Attention: Investor Relations or by directing a request to XM Satellite Radio Holdings Inc., 1500 Eckington Place, N.E. Washington, DC 20002, Attention: Investor Relations.

SIRIUS, XM and their respective directors and executive officers and other persons may be deemed to be participants in the solicitation of proxies in respect of the proposed transaction. Information regarding SIRIUS' directors and executive officers is available in its Annual Report on Form 10-K for the year ended December 31, 2006, which was filed with the SEC on March 1, 2007, and its proxy statement for its 2007 annual meeting of stockholders, which was filed with the SEC on April 23, 2007, and information regarding XM's directors and executive officers is available in XM's Annual Report on Form 10-K, for the year ended December 31, 2006, which was filed with the SEC on March 1, 2007 and its proxy statement for its 2007 annual meeting of stockholders, which was filed with the SEC on April 17, 2007. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, is contained in the Joint Proxy Statement/Prospectus.

    E-SIRI

    Contact Information for Investors and Financial Media:

    Paul Blalock
    SIRIUS
    212.584.5174
    pblalock@siriusradio.com

    Hooper Stevens
    SIRIUS
    212.901.6718
    hstevens@siriusradio.com

SOURCE SIRIUS Satellite Radio

http://www.sirius.com

Copyright (C) 2007 PR Newswire. All rights reserved

News Provided by COMTEX