Investor Relations

SIRIUS XM Radio Reports Fourth Quarter and Full Year 2008 Results

-- 2008 Pro Forma Revenue of $2.44 Billion, Up 18% Over 2007 - Total Subscribers of Approximately 19 Million, Up 10% Over 2007 - Company Achieves Positive Pro Forma Adjusted Income From Operations in Fourth Quarter 2008 - Liberty Media Investment Completed - Investor Conference Call Scheduled for Thursday, March 12, 8:00 AM ET

NEW YORK, March 10, 2009 /PRNewswire-FirstCall via COMTEX News Network/ -- SIRIUS XM Radio (Nasdaq: SIRI) today announced full year 2008 results, including pro forma full year 2008 revenue of $2.44 billion up 18% over 2007 pro forma revenue of $2.06 billion; total subscribers of more than 19 million up 10% from 2007 subscribers of 17.3 million; and positive pro forma adjusted income from operations in the fourth quarter of 2008.

(Logo: http://www.newscom.com/cgi-bin/prnh/20080819/NYTU044LOGO )

"In the fourth quarter 2008, the company's first full quarter of combined operations, SIRIUS XM made remarkable financial progress," said Mel Karmazin, CEO of SIRIUS. "For the first time in company history, we reached positive pro forma adjusted income from operations of $32 million, as compared with a loss of $224 million one year ago. Fourth quarter 2008 revenue of $644 million grew 16% over the year ago quarter while total cash operating expenses declined by 22%, a clear demonstration of our focus on improving profitability. Despite challenges in the overall economy and in the auto sector, we look forward to continuing to deliver on the synergies of the merger. We are also very pleased to report that we have closed the second and final phase of the previously announced investment by Liberty Media Corporation. These transactions resolve the uncertainty surrounding the company's and its subsidiaries' debt maturing in 2009."

SIRIUS XM ended the fourth quarter 2008 with 19,003,856 subscribers, up 10% from 17,348,622 subscribers at year end 2007. In the fourth quarter 2008, pro forma average revenue per subscriber (ARPU) grew to $10.60 from $10.42 in 2007. The monthly self-pay customer churn rate was 1.8% in the fourth quarter 2008, as compared with 1.7% in the fourth quarter 2007.

Fourth quarter 2008 pro forma revenue was $644 million, up 16% from fourth quarter 2007 pro forma revenue of $558 million. Subscriber acquisition costs (SAC) per gross subscriber addition was $70 in the fourth quarter of 2008, an improvement of 16% over the $83 in SAC per gross subscriber addition in the fourth quarter of 2007.

In the fourth quarter 2008, SIRIUS XM achieved positive pro forma adjusted income from operations of $31.8 million as compared with a pro forma adjusted loss from operations of ($224.1) million in the fourth quarter 2007. The pro forma fourth quarter 2008 net loss was ($248.5) million as compared with a pro forma net loss of ($405.0) million in the fourth quarter 2007. On a GAAP basis, the fourth quarter 2008 net loss was ($245.8) million or ($0.08) per share.

INVESTOR CONFERENCE CALL

SIRIUS XM plans to hold a conference call on Thursday, March 12, 2009 at 8:00 am ET to discuss these results. Investors and the press can listen to the conference call via the company's website, www.sirius.com, and on its satellite radio service by tuning to SIRIUS channel 126 or XM channel 90.

A replay of the call will be available on www.sirius.com.

PRO FORMA RESULTS OF OPERATIONS

The discussion of operating results below is based upon pro forma comparisons as if the merger occurred on January 1, 2007 and excludes the effects of stock-based compensation and purchase accounting adjustments.

FOURTH QUARTER 2008 VERSUS FOURTH QUARTER 2007

For the fourth quarter of 2008, SIRIUS XM recognized total pro forma revenue of $644.1 million compared to $557.5 million for the fourth quarter of 2007. This 15.5%, or $86.6 million, increase in revenue was driven by the net increase in subscribers of 1,655,234 from the fourth quarter of 2007.

Total ARPU for the three months ended December 31, 2008 was $10.60, compared to $10.42 for the three months ended December 31, 2007. The increase was driven by the start of our "Best of" package sales, most of which were at the $16.99 price point, and a lower mix of prepaid subscriptions from automakers in vehicles which have not sold through to end customers. These factors were partially offset by an increase in the mix of discounted OEM promotional trials, subscriber winback programs, second subscribers and a decline in net advertising revenue per average subscriber.

In the fourth quarter 2008, the company achieved positive pro forma adjusted income from operations of $31.8 million, compared to an adjusted loss from operations of ($224.1) million for the fourth quarter of 2007 (refer to the reconciliation table of net loss to adjusted income (loss) from operations). This decrease was driven by the increase in total revenue of $86.6 million and a $219.8 million decrease in operating expenses.

Programming and content costs decreased by 4%, or $3.9 million, over the prior year's quarter as savings began to be realized.

Revenue share and royalties expense decreased by 25%, or $40.8 million, over the prior year's quarter. The prior year quarter included a one time charge of $52 million in connection with the decision by the Copyright Royalty Board in January 2008 setting royalty rates for the performance of sound recordings effective January 1, 2007. Adjusting for this charge, royalties would have been up 10%, or $11.6 million, from the fourth quarter of 2007.

Customer service and billing costs increased 3%, or $2.0 million, from the prior year's quarter, reflecting higher subscriber totals and improved scale efficiencies.

Sales and marketing costs declined 34%, or $42.0 million, over the prior year's quarter due to reduced advertising and cooperative marketing spend, offset in part by higher customer retention spending. Sales and marketing costs were 13% of revenue in the fourth quarter of 2008 compared to 22% of revenue in the fourth quarter 2007.

Subscriber acquisition costs (SAC) declined 27%, or $48.0 million, and as a percent of revenue improved from 32% to 21% over the prior year's quarter. This improvement was driven by 27% lower gross additions in the fourth quarter.

SAC, as adjusted, per gross subscriber addition improved by 16% to $70 from $83 for the three months ended December 31, 2008 and 2007, respectively. The decrease was primarily driven by lower retail and OEM subsidies due to better product economics.

General and administrative costs decreased 20%, or $12.6 million, and declined as a percent of revenue from 12% to 8% over the prior year's quarter, reflecting lower merger costs and savings from the integration of administrative functions.

Engineering, design and development costs decreased 27%, or $3.9 million, due to lower product development costs and merger savings.

YEAR ENDED DECEMBER 31, 2008 VERSUS YEAR ENDED DECEMBER 31, 2007

For the year ended December 31, 2008, SIRIUS XM recognized total pro forma revenue of $2.4 billion compared with $2.1 billion for the year ended December 31, 2007. This 18.4%, or $378.1 million, increase in revenue was primarily driven by a $367.6 million increase in subscriber revenue resulting from the net increase in subscribers of 1,655,234 during 2008.

Total ARPU for the year ended December 31, 2008 was $10.51, compared to $10.61 for the year ended December 31, 2007. The decrease was driven by an increase in the mix of discounted OEM promotional subscriptions, subscriber winback programs, second subscribers and a decline in net advertising revenue per average subscriber.

The company's pro forma adjusted loss from operations decreased ($429.2) million to ($136.3) million for the year ended December 31, 2008 from ($565.5) million for the year ended December 31, 2007 (refer to the reconciliation table of net loss to adjusted income (loss) from operations). This decrease was driven by an 18.4%, or $378.1 million, increase in revenue and a 4.2%, or $129.5 million, decrease in expenses.

Programming and content costs for the year ended December 31, 2008 increased 11%, or $45.2 million, including a one-time payment to a programming provider of $27.5 million due upon completion of the merger. Excluding this one-time payment, programming costs increased by 4% or $17.7 million.

Revenue share and royalties expense increased by 19%, or $74.9 million, over the prior year, maintaining a flat percentage of revenue of approximately 20% in 2008 and 2007.

Customer service and billing costs increased 12%, or $26.8 million, from the prior year due to a larger subscriber base, mitigated by scale efficiencies.

Sales and marketing costs declined 17%, or $70.8 million, due to reduced advertising and cooperative marketing spend, offset in part by higher customer retention spending. As a percentage of revenue, sales and marketing costs improved from 20% in 2007 to 14% in 2008.

Subscriber acquisition costs declined nearly 12%, or $77.6 million, and as a percentage of revenue improved from 32% to 24%. This improvement was primarily driven by a 14% improvement in SAC per gross addition due to improved product economics and lower retail and OEM subsidies. Subscriber acquisition costs also declined as a result of the 5% decline in gross additions in the year.

SAC, as adjusted, per gross subscriber addition improved by 14% to $74 from $86 for the years ended December 31, 2008 and 2007, respectively. The decrease was primarily driven by lower retail and OEM subsidies due to better product economics.

General and administrative costs decreased 2%, or $4.8 million, and declined as a percent of revenue, reflecting one time costs in connection with the merger in the prior year and early integration savings.

Engineering, design and development costs decreased 17%, or $10.4 million, due to fewer OEM platform launches and lower product development costs.



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

    Subscriber  Data:
                            Pro Forma                     Pro Forma
                        Three months ended           Twelve months ended
                           December 31,                   December 31,
                      2008            2007            2008            2007

    Beginning
     subscribers  18,920,911      16,234,070      17,348,622      13,653,107
    Gross
     subscriber
     additions     1,713,210       2,336,640       7,710,306       8,077,674
    Deactivated
     subscribers  (1,630,265)     (1,222,088)     (6,055,072)     (4,382,159)
    Net additions     82,945       1,114,552       1,655,234       3,695,515
    Ending
     subscribers  19,003,856      17,348,622      19,003,856      17,348,622

     Retail        8,905,087       9,238,715       8,905,087       9,238,715
     OEM           9,995,953       8,033,268       9,995,953       8,033,268
     Rental          102,816          76,639         102,816          76,639
    Ending
     subscribers  19,003,856      17,348,622      19,003,856      17,348,622

     Retail         (131,333)        314,908        (333,628)        791,444
     OEM             218,249         791,356       1,962,685       2,860,722
     Rental           (3,971)          8,288          26,177          43,349
    Net additions     82,945       1,114,552       1,655,234       3,695,515



                             Pro Forma                       Pro Forma
                        Three months ended             Twelve months ended
                            December 31,                    December 31,
                        2008           2007             2008           2007

    Average self-pay
     monthly
     churn (1)(7)        1.8%            1.7%            1.8%            1.7%
    Conversion
     rate (2)(7)        44.2%           51.4%           47.5%           50.9%
    ARPU (3)(7)       $10.60          $10.42          $10.51          $10.61
    SAC, as adjusted,
     per gross
     subscriber
     addition
     (4)(7)              $70             $83             $74             $86
    Customer service
     and billing
     expenses, as
     adjusted,
     per average
     subscriber
     (5)(7)            $1.18           $1.30           $1.11           $1.18
    Total revenue   $644,108        $557,515      $2,436,740      $2,058,608
    Free cash
     flow (6)(7)     $25,877          $5,405       $(551,771)      $(504,869)
    Adjusted income
     (loss) from
     Operations (8)  $31,797       $(224,143)      $(136,298)      $(565,452)
    Net loss       $(248,468)      $(405,041)      $(902,335)    $(1,247,633)



                        SIRIUS XM RADIO INC. AND SUBSIDIARIES
                     PRO FORMA CONSOLIDATED RESULTS OF OPERATIONS
                                      (Unaudited)

                                 Pro Forma                 Pro Forma
                             Three months ended        Twelve months ended
                                 December 31,             December 31,
    (in thousands, except
     per share data)            2008       2007        2008          2007


    Total revenue            $644,108   $557,515  $2,436,740    $2,058,608

    Operating expenses:
    Satellite and
     transmission              22,851     23,697      99,185       101,721
    Programming and content   105,215    109,076     446,638       401,461
    Revenue share and
     royalties                122,711    163,541     477,962       403,059
    Customer service and
     billing                   67,036     65,006     244,195       217,402
    Cost of equipment          18,084     37,334      66,104        97,820
    Sales and marketing        81,712    123,711     342,296       413,084
    Subscriber acquisition
     costs                    132,731    180,767     577,126       654,775
    General and
     administrative            51,591     64,223     267,032       271,831
    Engineering, design and
     development               10,380     14,303      52,500        62,907
    Depreciation and
     amortization              49,519     75,045     245,571       293,976
    Share-based payment
     expense                   24,945     52,897     124,619       165,099
    Restructuring and
     related costs              2,977          -      10,434             -
    Total operating
     expenses                 689,752    909,600   2,953,662     3,083,135
    Loss from operations      (45,644)  (352,085)   (516,922)   (1,024,527)
    Other expense            (202,649)   (52,055)   (381,425)     (221,610)
    Loss before income
     taxes                   (248,293)  (404,140)   (898,347)   (1,246,137)
    Income tax expense           (175)      (901)     (3,988)       (1,496)
    Net loss                $(248,468) $(405,041)  $(902,335)  $(1,247,633)



                        SIRIUS XM RADIO INC. AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF OPERATIONS

                                        Actual                  Actual
                                 Three months ended      Twelve months ended
     (in thousands, except per        December 31,            December 31,
     share data)                  2008         2007        2008        2007
                               (Unaudited) (Unaudited)

    Revenue:
    Subscriber revenue, including
     effects of rebates          $565,435   $227,658   $1,543,951   $854,933
    Advertising revenue, net of
     agency fees                   15,776      9,770       47,190     34,192
    Equipment revenue              30,712     12,065       56,001     29,281
    Other revenue                  10,260        323       16,850      3,660
    Total revenue                 622,183    249,816    1,663,992    922,066
    Operating expenses
     (depreciation and
     amortization
    shown separately below) (1)
    Cost of services:
    Satellite and transmission     24,481      5,175       59,279     27,907
    Programming and content        89,214     62,735      312,189    236,059
    Revenue share and royalties   103,217     56,762      280,852    146,715
    Customer service and billing   67,818     29,288      165,036     93,817
    Cost of equipment              18,084     15,886       46,091     35,817
    Sales and marketing            80,699     56,866      231,937    183,213
    Subscriber acquisition costs  113,512    100,062      371,343    407,642
    General and administrative     64,586     37,212      213,142    155,863
    Engineering, design and
     development                   12,404      7,946       40,496     41,343
    Impairment of goodwill         15,331          -    4,766,190          -
    Depreciation and amortization  82,958     27,638      203,752    106,780
    Restructuring and related
     costs                          2,977          -       10,434          -
    Total operating expenses      675,281    399,570    6,700,741  1,435,156
    Loss from operations          (53,098)  (149,754)  (5,036,749)  (513,090)
    Other income (expense)
    Interest and investment
     income                           (90)     4,171        9,079     20,570
    Interest expense, net of
     amounts capitalized          (61,196)   (19,887)    (144,833)   (70,328)
    Loss from redemption of debt  (98,203)         -      (98,203)         -
    Loss on investments           (27,418)         -      (30,507)         -
    Other (expense) income         (5,664)        17       (9,599)        31
    Total other expense          (192,571)   (15,699)    (274,063)   (49,727)
    Loss before income taxes     (245,669)  (165,453)  (5,310,812)  (562,817)
    Income tax expense               (175)      (770)      (2,476)    (2,435)
    Net loss                    $(245,844) $(166,223) $(5,313,288) $(565,252)
    Net loss per common share
     (basic and diluted)           $(0.08)    $(0.11)      $(2.45)    $(0.39)
    Weighted average common
     shares outstanding
    (basic and diluted)         3,160,223  1,468,210    2,169,489  1,462,967


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


    Satellite and transmission     $1,349       $364       $4,236     $2,198
    Programming and content         4,672      2,786       12,148      9,643
    Customer service and billing      783        165        1,920        708
    Sales and marketing             2,165        539       13,541     15,607
    Subscriber acquisition costs        -        156           14      2,843
    General and administrative     12,995     10,261       49,354     44,317
    Engineering, design and
     development                    2,023        625        6,192      3,584

    Total share-based payment
     expense                      $23,987    $14,896      $87,405    $78,900



                       SIRIUS XM RADIO INC. AND SUBSIDIARIES
                       CONDENSED CONSOLIDATED BALANCE SHEETS


                                                  Actual
    (in thousands, except share and          As of December 31,
     per share data)                         2008           2007


                  ASSETS
    Current assets:
     Cash and cash equivalents             $380,446      $438,820
     Accounts receivable, net of
      allowance for doubtful
      accounts of $6,746 and
      $4,608, respectively                  102,024        44,068
     Receivables from distributors           45,950        60,004
     Inventory, net                          24,462        29,537
     Prepaid expenses                        67,203        31,392
     Related party current assets           114,177         2,161
     Restricted investments                       -        35,000
     Other current assets                    58,744        37,875
     Total current assets                   793,006       678,857
    Property and equipment, net           1,703,476       806,263
    FCC licenses                          2,083,654        83,654
    Restricted investments, net
     of current portion                     141,250        18,000
    Deferred financing fees, net             40,156        13,864
    Intangible assets, net                  688,671             -
    Goodwill                              1,834,856             -
    Related party long-term
     assets, net of current
     portion                                124,607         3,237
    Other long-term assets                   81,019        90,274
     Total assets                        $7,490,695    $1,694,149
      LIABILITIES AND STOCKHOLDERS' EQUITY
                  (DEFICIT)
    Current liabilities:
     Accounts payable and accrued
      expenses                             $877,594      $464,943
     Accrued interest                        76,463        24,772
     Deferred revenue                       985,180       548,330
     Current maturities of long-term debt   399,726        35,801
     Related party current liabilities       68,373         1,148
     Total current liabilities            2,407,336     1,074,994
    Long-term debt, net of
     current portion                      2,851,740     1,278,617
    Deferred revenue, net of
     current portion                        247,889       110,525
    Deferred credit on executory
     contracts                            1,037,190             -
    Deferred tax liability                  894,453        12,771
    Other long-term liabilities              43,550         9,979
     Total liabilities                    7,482,158     2,486,886

    Commitments and  contingencies                -             -
    Stockholders' equity (deficit):
     Series A convertible
      preferred stock, par value
      $0.001 (liquidation
      preference of $51,370 and $0 at
      December 31, 2008 and 2007,
      respectively); 50,000,000
      authorized at December 31,
      2008 and 2007, 24,808,959 and
      zero shares issued and outstanding
      at December 31, 2008 and 2007,
      respectively                               25             -
     Common stock, par value
      $0.001; 8,000,000,000 and
      2,500,000,000 shares
      authorized at December 31,
      2008 and 2007, respectively;
      3,651,765,837 and 1,471,143,570
      shares issued and
      outstanding at December 31,
      2008 and 2007, respectively             3,652         1,471
     Accumulated other comprehensive loss,
      net of tax                             (7,871)            -
     Additional paid-in capital           9,724,991     3,604,764
     Accumulated deficit                 (9,712,260)   (4,398,972)
     Total stockholders' equity
      (deficit)                               8,537      (792,737)
     Total liabilities and
      stockholders' equity
      (deficit)                          $7,490,695    $1,694,149





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


                                                         Actual
                                            For the Years Ended December 31,
                                                2008              2007
    (in thousands)

    Cash flows from operating
     activities:
    Net loss                               $(5,313,288)        $(565,252)
    Adjustments to reconcile net
     loss to net cash used in
     operating activities:
    Depreciation and amortization              203,752           106,780
    Impairment of goodwill                   4,766,190                 -
    Non-cash interest expense, net
     of amortization of premium                 (6,311)            4,269
    Provision for doubtful accounts             21,589             9,002
    Non-cash loss from redemption of
     debt                                       98,203                 -
    Amortization of deferred income
     related to equity method
     investment                                 (1,156)                -
    Loss on disposal of assets                   4,879              (428)
    Loss on investments, net                    28,999                 -
    Share-based payment expense                 87,405            78,900
    Deferred income taxes                        2,476             2,435
    Other non-cash purchase price
     adjustments                               (68,330)                -
    Other                                        1,643                 -
    Changes in operating assets and
     liabilities:
    Accounts receivable                        (32,121)          (28,881)
    Inventory                                    8,291             4,965
    Receivables from distributors               14,401           (13,179)
    Related party assets                       (22,249)                -
    Prepaid expenses and other
     current assets                            (19,953)           11,459
    Other long-term assets                      (5,490)           12,109
    Accounts payable and accrued
     expenses                                  (65,481)           66,169
    Accrued interest                            23,081            (8,920)
    Deferred revenue                            55,778           169,905
    Related party liabilities                   34,646                 -
    Other long-term liabilities                 30,249             1,901
    Net cash used in operating
     activities                               (152,797)         (148,766)


    Cash flows from investing activities:
    Additions to property and equipment       (130,551)          (65,264)
    Sales of property and equipment                105               641
    Purchases of restricted and
     other investments                          (3,000)             (310)
    Acquisition of acquired entity
     cash                                      819,521                 -
    Merger related costs                       (23,519)          (29,444)
    Purchase of available-for-sale
     securities                                      -                 -
    Sale of restricted and other
     investments                                65,869            40,191
    Net cash provided by (used in)
     investing activities                      728,425           (54,186)


    Cash flows from financing
     activities:
    Proceeds from exercise of
     warrants and stock options                    471             4,097
    Long term borrowings, net of
     related costs                             531,743           244,879
    Payment of premiums on
     redemption of debt                        (18,693)                -
    Payments to minority interest
     holder                                     (1,479)                -
    Repayment of long term
     borrowings                             (1,146,044)             (625)
    Net cash (used in) provided by
     financing activities                     (634,002)          248,351
    Net (decrease) increase in cash
     and cash equivalents                      (58,374)           45,399
    Cash and cash equivalents at
     beginning of period                       438,820           393,421
    Cash and cash equivalents at end
     of period                                $380,446          $438,820


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 income (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) Average self-pay monthly churn represents the average of self pay
        deactivations by the period divided by the average self pay subscriber
        balance for the period.

    (2) We measure the percentage of subscribers that receive the service and
        convert to self-paying after the initial promotion period. We refer
        to this as the "conversion rate." At the time of sale, vehicle owners
        generally receive between three and twelve month prepaid trial
        subscriptions and we receive a subscription fee from the OEM.
        Promotional periods generally include the period of trial service
        plus 30 days to handle the receipt and processing of payments. We
        measure conversion rate three months after the period in which the
        trial service ends. Based on our experience it may take up to 90
        days after the trial service ends for subscribers to respond to our
        marketing communications and become self-paying subscribers.

    (3) ARPU is derived from 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 (in
        thousands, except for per subscriber amounts):


                               Unaudited Pro Forma       Unaudited Pro Forma
                               Three months ended        Twelve months ended
                                  December 31,               December 31,
                                2008          2007       2008         2007

    Subscriber revenue        $585,534      $499,109  $2,247,334  $1,879,766
    Net advertising
     revenue                    15,776        20,571      69,933      73,340
        Total subscriber and
         net advertising
         revenue              $601,310      $519,680  $2,317,267  $1,953,106

    Daily weighted
     average number of
     subscribers            18,910,689    16,629,079  18,373,274  15,342,041
    ARPU                        $10.60        $10.42      $10.51      $10.61


    (4) SAC, as adjusted, per gross subscriber addition is derived from
        subscriber acquisition costs and margins from the direct sale of
        radios and accessories, excluding stock-based compensation, divided
        by the number of gross subscriber additions for the period. SAC, as
        adjusted, per gross subscriber addition is calculated as follows (in
        thousands, except for per subscriber amounts):




                               Unaudited Pro Forma      Unaudited Pro Forma
                                Three months ended      Twelve months ended
                                   December 31,            December 31,
                                2008           2007       2008       2007

    Subscriber acquisition
     cost                    $132,731       $190,090   $577,140   $666,785
    Less: stock-based
     compensation granted
     to third parties and
     employees                      -         (9,323)       (14)   (12,010)
    Add: margin from direct
     sales of radios
     and accessories          (12,628)        12,201     (3,294)    40,206
    SAC, as adjusted         $120,103       $192,968   $573,832   $694,981

    Gross subscriber
     additions              1,713,210      2,336,640  7,710,306  8,077,674
    SAC, as adjusted, per
     gross subscriber
     addition                     $70            $83        $74        $86


    (5) Customer service and billing expenses, as adjusted, per average
        subscriber is derived from 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, as adjusted, per average subscriber is
        calculated as follows (in thousands, except for per subscriber
        amounts):


                              Unaudited Pro Forma        Unaudited Pro Forma
                               Three months ended        Twelve months ended
                                  December 31,               December 31,
                                 2008         2007        2008        2007

    Customer service and
     billing expenses          $67,906      $65,991    $248,176    $220,593
    Less: stock-based
     compensation                 (870)        (985)     (3,981)     (3,191)
    Customer service and
     billing expenses, as
     adjusted                  $67,036      $65,006    $244,195    $217,402

    Daily weighted
     average number of
     subscribers            18,910,689   16,629,079  18,373,274  15,342,041
    Customer service and
     billing expenses, as
     adjusted, per average
     subscriber                  $1.18        $1.30       $1.11       $1.18


    (6) Free cash flow is calculated as follows (in thousands):


                           Unaudited Pro Forma        Unaudited Pro Forma
                            Three months ended        Twelve months ended
                               December 31,              December 31,
                             2008           2007       2008         2007

    Net cash used in
     operating activities   $64,195      $30,957  $(403,883)   $(303,496)
    Additions to property
     and equipment          (27,846)     (18,954)  (161,394)    (198,602)
    Merger related costs    (10,472)      (6,680)   (23,519)     (29,444)
    Restricted and other
     investment activity          -           82     37,025       26,673
    Free cash flow          $25,877       $5,405  $(551,771)   $(504,869)


    (7) Average monthly self-pay churn; conversion rate; ARPU; SAC, as
        adjusted, per gross subscriber addition; customer service and billing
        expenses, as adjusted, per average subscriber; and free cash flow are
        not measures of financial performance under U.S. generally accepted
        accounting principles ("GAAP"). We believe these non-GAAP financial
        measures provide meaningful supplemental information regarding our
        operating performance and are used by us for budgetary and planning
        purposes; when publicly providing our business outlook; as a means to
        evaluate period-to-period comparisons; and to compare our performance
        to that of our competitors. We also believe that investors also use
        our current and projected metrics to monitor the performance of our
        business and to make investment decisions.

        We believe the exclusion of stock-based compensation expense in our
        calculations of SAC, as adjusted, per gross subscriber addition and
        customer service and billing expenses, as adjusted, per average
        subscriber is useful given the significant variation in expense that
        can result from changes in the fair market value of our common stock,
        the effect of which is unrelated to the operational conditions that
        give rise to variations in the components of our subscriber
        acquisition costs and customer service and billing expenses.
        Specifically, the exclusion of stock-based compensation expense in
        our calculation of SAC, as adjusted, 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, as a substitute for, or superior to measures of financial
        performance prepared in accordance with GAAP.

    (8) We refer to net income (loss) before taxes; other income (expense)
        - including interest and investment income, interest expense,
        depreciation and amortization, restructuring and related costs and
        impairment of goodwill; and stock-based compensation expense as
        adjusted income (loss) from operations. Adjusted income (loss) from
        operations is not a measure of financial performance under GAAP. We
        believe adjusted income (loss) from operations is a useful measure of
        our operating performance. We use adjusted income (loss) from
        operations for budgetary and planning purposes; to assess the relative
        profitability and on-going performance of our consolidated operations;
        to compare our performance from period-to-period; and to compare our
        performance to that of our competitors. We also believe adjusted
        income (loss) from operations is useful to investors to compare our
        operating performance to the performance of other communications,
        entertainment and media companies. We believe that investors use
        current and projected adjusted income (loss) from operations to
        estimate our current or prospective enterprise value and to make
        investment decisions.

        Because we fund and build-out our satellite radio system through the
        periodic raising and expenditure of large amounts of capital, our
        results of operations reflect significant charges for interest and
        depreciation expense. We believe adjusted income (loss) from
        operations provides useful information about the operating performance
        of our business apart from the costs associated with our capital
        structure and physical plant. The exclusion of interest and
        depreciation and amortization expense is useful given fluctuations in
        interest rates and significant variation in depreciation and
        amortization 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. We believe 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. We believe the exclusion
        of restructuring and related costs and impairment of goodwill is
        useful given the one-time nature of these transactions. We also
        believe 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 our common stock. To compensate
        for the exclusion of taxes, other income (expense), depreciation and
        stock-based compensation expense, we separately measure and budget for
        these items.

        There are material limitations associated with the use of adjusted
        income (loss) from operations in evaluating our company compared with
        net loss, which reflects overall financial performance, including the
        effects of taxes, other income (expense), depreciation and
        amortization, restructuring and related costs, impairment of goodwill
        and stock-based compensation expense. We use adjusted income (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 our
        operating results after giving effect for these costs, should refer to
        net loss as disclosed in our unaudited consolidated statements of
        operations. Since adjusted income (loss) from operations is a non-GAAP
        financial measure, our calculation of adjusted income (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 prepared in accordance
        with GAAP.

        The reconciliation of the pro forma unadjusted Net loss to the pro
        forma Adjusted income (loss) from operations is calculated as follows:


                            Unaudited Pro Forma        Unaudited Pro Forma
                            Three months ended         Twelve months ended
                               December 31,               December 31,
    (in thousands)         2008           2007        2008            2007

    Reconciliation of
     Net loss to
     Adjusted loss from
     operations:
      Net loss as
       reported         $(248,468)    $(405,041)   $(902,335)   $(1,247,633)
    Add back Net loss
     items excluded
     from Adjusted loss
     from operations:
      Interest and
       investment income       90        (6,978)     (12,092)       (34,654)
      Interest expense,
       net of amounts
       capitalized         71,274        48,703      235,655        186,933
      Income tax expense      175           901        3,988          1,496
      Loss from
       redemption of debt  98,203           728       98,203          3,693
      Loss on investments  27,418         3,768       43,517         56,156
      Other expense
       (income)             5,664         5,834       16,142          9,482
        Loss from
         operations       (45,644)     (352,085)    (516,922)    (1,024,527)
      Restructuring and
       related costs        2,977             -       10,434              -
      Depreciation and
       amortization        49,519        75,045      245,571        293,976
      Stock-based
       compensation        24,945        52,897      124,619        165,099
    Adjusted income
     (loss) from
     operations           $31,797     $(224,143)   $(136,298)     $(565,452)

There are material limitations associated with the use of a pro forma unadjusted results of operations in evaluating our company compared with our GAAP Results of operations, which reflects overall financial performance. We use pro forma unadjusted results of 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 our operating results after giving effect for these costs, should refer to Results of operations as disclosed in our unaudited consolidated statements of operations. Since pro forma unadjusted results of operations is a non-GAAP financial measure, our 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 XM Radio

SIRIUS XM Radio is America's satellite radio company delivering commercial-free music channels, premier sports, news, talk, entertainment, traffic and weather, to more than 19 million subscribers.

SIRIUS XM Radio has content relationships with an array of personalities and artists, including Howard Stern, Martha Stewart, Oprah Winfrey, Jimmy Buffett, Jamie Foxx, Barbara Walters, Opie & Anthony, Bubba the Love Sponge(R), The Grateful Dead, Willie Nelson, Bob Dylan, Tom Petty, and Bob Edwards. SIRIUS XM Radio is the leader in sports programming as the Official Satellite Radio Partner of the NFL, Major League Baseball(R), NASCAR(R), NBA, NHL(R), and PGA TOUR(R), and broadcasts major college sports.

SIRIUS XM Radio has arrangements with every major automaker. SIRIUS XM Radio products are available at shop.sirius.com and shop.xmradio.com, and at retail locations nationwide, including Best Buy, RadioShack, Target, Sam's Club, and Wal-Mart.

SIRIUS XM Radio also offers SIRIUS Backseat TV, the first ever live in-vehicle rear seat entertainment featuring Nickelodeon, Disney Channel and Cartoon Network; XM NavTraffic(R) service for GPS navigation systems delivers real-time traffic information, including accidents and road construction, for more than 80 North American markets.

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 and XM, 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 failure to realize synergies and cost-savings from the merger 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. 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' Annual Report on Form 10-K for the year ended December 31, 2008, which is filed with the Securities and Exchange Commission (the "SEC") and available at the SEC's Internet site (http://www.sec.gov). The information set forth herein speaks only as of the date hereof, and 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.

E-SIRI

Contact Information for Investors and Financial Media:

    Paul Blalock
    SIRIUS XM Radio
    212 584 5174
    paul.blalock@siriusxm.com

    Patrick Reilly
    SIRIUS XM Radio
    212 901 6646
    patrick.reilly@siriusxm.com

    Hooper Stevens
    SIRIUS XM Radio
    212 901 6718
    hooper.stevens@siriusxm.com

SOURCE SIRIUS XM Radio

http://www.sirius.com

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