Investor Relations

SIRIUS XM Radio Reports First Quarter 2009 Results

-- Pro Forma Revenue of $605.5 Million, Up 5% Year Over Year

--- Company Achieves $108.8 Million in Pro Forma Adjusted Income From

--- Operations - An Improvement of $179 Million Year Over Year

--- Cash Operating Costs Decrease 23% Year Over Year

--- Company Raises 2009 Adjusted Income From Operations Guidance

NEW YORK, May 7, 2009 /PRNewswire-FirstCall via COMTEX News Network/ -- SIRIUS XM Radio (Nasdaq: SIRI) today announced first quarter 2009 financial and operating results, including $605.5 million in pro forma revenue, up 5% over first quarter 2008 pro forma revenue of $578.8 million; and $108.8 million in first quarter pro forma adjusted income from operations, as compared with first quarter 2008 pro forma adjusted loss from operations of ($70.2) million.

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

"Satellite radio is now a cash flow growth story," said Mel Karmazin, CEO of SIRIUS XM. "First quarter 2009 adjusted income from operations of $108.8 million is our second consecutive quarter of positive adjusted income from operations and represents an improvement of $179 million over last year's first quarter pro forma loss from operations of ($70.2) million. With a 5% increase in pro forma revenue and a 23% decrease in cash operating costs, these results demonstrate our focus on improving profitability despite slower automobile sales and a 2% sequential decline in satellite radio subscribers. The growth in adjusted income from $31.8 million in the fourth quarter of 2008 to $108.8 million in the first quarter of 2009 should give investors comfort that we are well positioned to exceed $350 million in adjusted income from operations this year, an increase from our prior guidance to exceed $300 million."

First quarter 2009 pro forma revenue was $605.5 million, up 5% from first quarter 2008 pro forma revenue of $578.8 million. Subscriber acquisition cost (SAC) per gross subscriber addition was $61 in the first quarter of 2009, an improvement of 26% over the $82 in pro forma SAC per gross subscriber addition in the first quarter of 2008.

SIRIUS XM ended first quarter 2009 with 18,599,434 subscribers, up 3% from 17,974,531 pro forma subscribers at the end of first quarter 2008 and down 2% from fourth quarter 2008 subscribers of 19,003,856. In the first quarter 2009, pro forma average revenue per subscriber (ARPU) was $10.43, as compared to pro forma ARPU of $10.48 in the first quarter 2008. The pro forma self-pay monthly customer churn was 2.2% in the first quarter 2009, as compared with self-pay monthly customer churn of 2.1% for SIRIUS and 1.8% for XM in the first quarter 2008.

In the first quarter 2009, SIRIUS XM achieved positive pro forma adjusted income from operations of $108.8 million as compared to a pro forma adjusted loss from operations of ($70.2) million in the first quarter 2008.

The first quarter 2009 pro forma net loss improved 73% to ($62.9) million as compared to a first quarter 2008 pro forma net loss of ($233.4) million. Pro forma free cash flow in the first quarter 2009 improved 99% to ($3.6) million as compared to a first quarter 2008 pro forma free cash flow loss of ($311.1) million.

On a GAAP basis, first quarter 2009 revenue was $586.9 million, the first quarter 2009 net loss was ($50.4) million, or ($0.01) per share, and the first quarter 2009 net loss attributable to common stockholders was ($236.6) million, or ($0.07) per share. In the first quarter 2008, the GAAP net loss was ($104.1) million, or ($0.07) per share.

2009 OUTLOOK

SIRIUS XM now expects to achieve over $350 million in 2009 adjusted income. This is an increase from the company's previous guidance of over $300 million in 2009 adjusted income provided on March 10, 2009.

PRO FORMA RESULTS OF OPERATIONS

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

FIRST QUARTER 2009 VERSUS FIRST QUARTER 2008

For the first quarter of 2009, we recognized total pro forma revenue of $605.5 million compared to $578.8 million for the first quarter of 2008. This 5%, or $26.7 million, revenue growth was driven by a 6% growth in average subscribers.

ARPU was $10.43 and $10.48 for the three months ended March 31, 2009 and 2008, respectively. The decrease was driven by a decrease in net advertising revenue per average subscriber, offset by an increase due to the sale of "Best of" programming.

Adjusted income (loss) from operations was $108,841 and ($70,154) for the three months ended March 31, 2009 and 2008, respectively (refer to the reconciliation table of net loss to adjusted income (loss) from operations). Adjusted income (loss) from operations was favorably impacted by the $26,676 increase in revenues and the $152,319 decrease in expenses included in adjusted income (loss) from operations.

Satellite and transmission costs decreased 23%, or $5,990, in the three months ended March 31, 2009 compared to the same period in 2008 due to reductions in maintenance costs, repeater lease expense, and personnel costs.

Programming and content costs decreased 10%, or $11,244, in the three months ended March 31, 2009 compared to the same period in 2008, mainly due to reductions in personnel and on-air talent costs as well as savings on various content agreements.

Revenue share and royalties increased by 9%, or $10,119, while maintaining relatively flat as a percentage of revenue in the three months ended March 31, 2009 compared to the same period in 2008.

Customer service and billing costs decreased by $805 in the three months ended March 31, 2009 compared to the same period in 2008, due to scale efficiencies over a larger subscriber base.

Cost of equipment decreased by 50%, or $8,146, in the three months ended March 31, 2009 compared to the same period in 2008 as a result of a decrease in our direct to customer sales and lower inventory write-downs.

Sales and marketing costs decreased 35%, or $28,072, and decreased as a percentage of revenue from 14% to 8% in the three months ended March 31, 2009 compared to the same period in 2008. The decrease in Sales and Marketing costs was due to reduced advertising and cooperative marketing spend as well as reductions to personnel costs and third party distribution support expenses.

Subscriber acquisition costs decreased 48%, or $77,624, and decreased as a percentage of revenue from 28% to 14% in the three months ended March 31, 2009 compared to the same period in 2008. This improvement was primarily driven by a 26% improvement in SAC, as adjusted, per gross addition due to fewer OEM installations relative to gross subscriber additions, improved OEM subsidies and higher one time aftermarket inventory reserves in the first quarter of 2008 compared to the first quarter of 2009. Subscriber acquisition costs also decreased as a result of the 34% decline in gross additions during the three months ended March 31, 2009.

General and administrative costs decreased 32%, or $22,903, mainly due to the absence of onetime charges related to certain legal and regulatory matters incurred in 2008 and lower personnel costs.

Engineering, design and development costs decreased 48%, or $7,654, in the three months ended March 31, 2009 compared to the same period in 2008, due to lower costs associated with manufacturing of radios, OEM tooling and manufacturing, and personnel.

Other expenses increased 93%, or $46,802, in the three months ended March 31, 2009 compared to the same period in 2008 driven mainly by an increase in interest expense of $25,390 and loss from redemption of debt of $17,957. Interest expense increased due primarily to XM's issuance of the 13% Senior Notes due 2013 and the 7% Exchangeable Senior Subordinated Notes due 2014 in the third quarter of 2008.

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

                                                       Three Months Ended
                                                           March 31,
                                                       2009          2008
                                                     (Actual)   (Pro Forma)
    Beginning subscribers                           19,003,856   17,348,622
    Gross subscriber additions                       1,338,961    2,041,656
    Deactivated subscribers                         (1,743,383)  (1,415,747)
    Net additions                                     (404,422)     625,909
    Ending subscribers                              18,599,434   17,974,531

        Retail                                       8,537,056    9,189,927
        OEM                                          9,958,349    8,692,319
        Rental                                         104,029       92,285
    Ending subscribers                              18,599,434   17,974,531

        Retail                                        (368,031)     (48,788)
        OEM                                            (37,604)     659,051
        Rental                                           1,213       15,646
    Net additions                                     (404,422)     625,909

        Self-pay                                    15,436,410   14,313,406
        Paid promotional                             3,163,024    3,661,125
    Ending subscribers                              18,599,434   17,974,531

        Self-pay                                      (113,247)     440,060
        Paid promotional                              (291,175)     185,849
    Net additions                                     (404,422)     625,909

                                                              Pro Forma
                                                         Three Months Ended
                                                               March 31,
                                                          2009          2008

    Average self-pay monthly churn (1)(7)                  2.2%         1.9%
    Conversion rate (2)(7)                                44.9%        51.0%
    ARPU (3)(7)                                         $10.43       $10.48
    SAC, as adjusted, per gross subscriber
     addition (4)(7)                                       $61          $82
    Customer service and billing expenses, as adjusted,
     per average subscriber (5)(7)                       $1.06        $1.14
    Total revenue                                     $605,480     $578,804
    Free cash flow (6)(7)                              $(3,646)   $(311,099)
    Adjusted income (loss) from operations (8)        $108,841     $(70,154)
    Net loss                                          $(62,877)   $(233,387)


                    SIRIUS XM RADIO INC. AND SUBSIDIARIES
                PRO FORMA CONSOLIDATED RESULTS OF OPERATIONS
                                 (Unaudited)
                                                         Pro Forma
                                                     Three Months ended
                                                          March 31,
    (in thousands)                                    2009       2008

    Subscriber revenue, including effects of
     rebates                                        $573,081   $536,509
    Advertising revenue, net of agency fees           12,304     17,526
    Equipment revenue                                  9,909     10,384
    Other revenue                                     10,186     14,385
    Total revenue                                    605,480    578,804
    Operating expenses:
    Satellite and transmission                        19,741     25,731
    Programming and content                           96,678    107,922
    Revenue share and royalties                      121,261    111,142
    Customer service and billing                      59,262     60,067
    Cost of equipment                                  7,993     16,139
    Sales and marketing                               51,008     79,080
    Subscriber acquisition costs                      83,710    161,334
    General and administrative                        48,575     71,478
    Engineering, design and development                8,411     16,065
    Depreciation and amortization                     51,483     72,389
    Share-based payment expense                       21,500     39,766
    Restructuring and related costs                      614          -
    Total operating expenses                         570,236    761,113
    Income (loss) from operations                     35,244   (182,309)
    Other expense                                    (97,006)   (50,204)
    Loss before income taxes                         (61,762)  (232,513)
    Income tax expense                                (1,115)      (874)
    Net loss                                        $(62,877) $(233,387)


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

                                                              Actual
                                                           For the Three
                                                              Months
                                                          Ended March 31,
    (in thousands, except per share data)                2009       2008

    Revenue:
        Subscriber revenue, including effects of
         rebates                                        $556,392   $255,640
        Advertising revenue, net of agency fees           12,304      8,408
        Equipment revenue                                  9,909      6,063
        Other revenue                                      8,374        239
    Total revenue                                        586,979    270,350
    Operating expenses (depreciation and amortization
        shown separately below) (1)
        Cost of services:
            Satellite and transmission                    20,279      7,822
            Programming and content                       80,408     61,692
            Revenue share and royalties                  100,466     42,320
            Customer service and billing                  59,801     26,922
            Cost of equipment                              7,993      7,588
        Sales and marketing                               51,830     38,467
        Subscriber acquisition costs                      73,068     89,824
        General and administrative                        59,314     48,778
        Engineering, design and development                9,778      8,656
        Depreciation and amortization                     82,367     26,906
        Restructuring and related costs                      614          -
    Total operating expenses                             545,918    358,975
        Income (loss) from operations                     41,061    (88,625)
    Other income (expense)
        Interest and investment income                       738      2,802
        Interest expense, net of amounts capitalized     (65,743)   (17,675)
        Loss from redemption of debt                     (17,957)         -
        Loss on investments                               (7,906)         -
        Other income (expense)                               511        (77)
    Total other expense                                  (90,357)   (14,950)
        Loss before income taxes                         (49,296)  (103,575)
        Income tax expense                                (1,115)      (543)

            Net loss                                     (50,411)  (104,118)
        Preferred stock beneficial conversion feature   (186,188)         -
            Net loss attributable to common
             stockholders                              $(236,599) $(104,118)
    Net loss per common share (basic and diluted)         $(0.07)    $(0.07)
    Weighted average common shares outstanding
     (basic and diluted)                               3,523,888  1,475,496

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

    Satellite and transmission                              $758       $797
    Programming and content                                2,489      2,789
    Customer service and billing                             539        276
    Sales and marketing                                    4,287      5,240
    Subscriber acquisition costs                               -         14
    General and administrative                            10,739     11,998
    Engineering, design and development                    1,367      1,148
    Total share-based payment expense                    $20,179    $22,262


                      SIRIUS XM RADIO INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

                                                   March 31,     December 31,
                                                      2009          2008
     (in thousands, except share and per share
     data)                                          (Unaudited)
                      ASSETS
    Current assets:
    Cash and cash equivalents                        $375,486      $380,446
    Accounts receivable, net of allowance for
     doubtful accounts of $10,821 and $10,860,
     respectively                                      94,793       102,024
    Receivables from distributors                      45,584        45,950
    Inventory, net                                     19,889        24,462
    Prepaid expenses                                  124,212        67,203
    Related party current assets                      108,643       114,177
    Other current assets                               60,989        58,744
    Total current assets                              829,596       793,006
    Property and equipment, net                     1,696,864     1,703,476
    FCC licenses                                    2,083,654     2,083,654
    Restricted investments, net of current
     portion                                            3,250       141,250
    Deferred financing fees, net                       45,313        40,156
    Intangible assets, net                            668,241       688,671
    Goodwill                                        1,834,856     1,834,856
    Related party long-term assets, net of
     current portion                                  199,621       124,607
    Other long-term assets                            113,645        81,019
    Total assets                                   $7,475,040    $7,490,695

       LIABILITIES AND STOCKHOLDERS' EQUITY
    Current liabilities:
    Accounts payable and accrued expenses            $570,582      $642,820
    Accrued interest                                   58,205        76,463
    Deferred revenue                                1,041,589       985,180
    Current portion of deferred credit on
     executory contracts                              237,944       234,774
    Current maturities of long-term debt              356,303       399,726
    Current maturities of long-term related
     party debt                                        21,500             -
    Related party current liabilities                  54,094        68,373
    Total current liabilities                       2,340,217     2,407,336
    Long-term debt, net of current portion          2,528,277     2,851,740
    Long-term related party debt, net of
     current portion                                  186,216             -
    Deferred revenue, net of current portion          251,251       247,889
    Deferred credit on executory contracts,
     net of current portion                           980,364     1,037,190
    Deferred tax liability                            895,557       894,453
    Related party long-term liabilities, net
     of current portion                                15,336             -
    Other long-term liabilities                        33,294        43,550
    Total liabilities                               7,230,512     7,482,158

    Commitments and contingencies                           -             -
    Stockholders' equity:
    Preferred stock, par value $0.001; 50,000,000
     authorized at March 31,
     2009 and December 31, 2008:
    Series A convertible preferred stock
     (liquidation preference of $51,370
     at March 31, 2009 and December 31, 2008);
     24,808,959 shares issued and
     outstanding at March 31, 2009 and
     December 31, 2008                                     25            25
    Convertible perpetual preferred stock, series B
     (liquidation preference of $13 and $0 at
     March 31, 2009 and December 31, 2008,
     respectively); 12,500,000 and
     zero shares issued and outstanding at
     March 31, 2009 and December 31, 2008,
     respectively                                          13             -
    Common stock, par value $0.001; 8,000,000,000
     shares authorized at March 31, 2009 and
     December 31, 2008; 3,856,414,132 and
     3,651,765,837 shares issued and outstanding
     at March 31, 2009 and December 31, 2008,
     respectively                                       3,856         3,652
    Accumulated other comprehensive loss, net
     of tax                                            (7,439)       (7,871)
    Additional paid-in capital                     10,196,932     9,724,991
    Accumulated deficit                            (9,948,859)   (9,712,260)
    Total stockholders' equity                        244,528         8,537
    Total liabilities and stockholders' equity     $7,475,040    $7,490,695


                     SIRIUS XM RADIO INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (Unaudited)

                                                          For the Three
                                                              Months
                                                          Ended March 31,
    (in thousands)                                        2009       2008

    Cash flows from operating activities:
        Net loss                                       $(50,411) $(104,118)
        Adjustments to reconcile net loss to net cash provided by (used
         in) operating activities:
            Depreciation and amortization                82,367     26,906
            Non-cash interest expense, net of
             amortization of premium                      4,429      1,004
            Provision for doubtful accounts               7,575      2,560
            Loss from redemption of debt                 17,957          -
            Amortization of deferred income related
             to equity method investment                   (694)         -
            Loss on investments                           7,906          -
            Share-based payment expense                  20,179     22,262
            Deferred income taxes                         1,115        543
            Other non-cash purchase price adjustments   (41,150)         -
            Changes in operating assets and liabilities:
                Accounts receivable                        (344)    18,765
                Inventory                                 4,573      4,193
                Receivables from distributors              (276)    (9,988)
                Related party assets                      8,880          -
                Prepaid expenses and other current
                 assets                                  31,982     14,256
                Other long-term assets                   21,995      3,256
                Accounts payable and accrued expenses   (53,339)  (116,741)
                Accrued interest                        (18,087)   (11,885)
                Deferred revenue                         47,954     14,712
                Related party liabilities                (8,108)         -
                Other long-term liabilities             (17,632)    (5,017)
                        Net cash provided by (used
                         in) operating activities        66,871   (139,292)

    Cash flows from investing activities:
        Additions to property and equipment             (71,140)   (39,225)
        Purchases of restricted and other investments         -     (3,000)
        Merger-related costs                                623    (10,018)
        Sale of restricted and other investments              -      5,008
                        Net cash used in investing
                         activities                     (70,517)   (47,235)

    Cash flows from financing activities:
        Proceeds from exercise of warrants and stock
         options                                              -        840
        Preferred stock issuance costs, net              (3,712)         -
        Related party long-term borrowings, net of
         costs                                          211,463          -
        Payment of premiums on redemption of debt       (10,072)         -
        Repayment of long-term borrowings              (198,993)      (625)
                        Net cash (used in) provided
                         by financing activities         (1,314)       215
    Net decrease in cash and cash equivalents            (4,960)  (186,312)
    Cash and cash equivalents at beginning of period    380,446    438,820
    Cash and cash equivalents at end of period         $375,486   $252,508

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

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

(2) We measure the percentage of subscribers that receive our 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 number of months in the period, 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
                                                       Three Months Ended
                                                            March 31,
                                                        2009       2008

    Subscriber revenue                                 $573,081   $536,509
    Net advertising revenue                              12,304     17,526
        Total subscriber and net advertising revenue   $585,385   $554,035

    Daily weighted average number of subscribers     18,713,485 17,615,684
    ARPU                                                 $10.43     $10.48

(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 share-based payment expense 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
                                                     Three Months Ended
                                                          March 31,
                                                       2009       2008

    Subscriber acquisition cost                       $83,710   $161,348
    Less: share-based payment expense granted
     to third parties and employees                         -        (14)
    Less/Add: margin from direct sales of radios
     and accessories                                   (1,916)     5,755
    SAC, as adjusted                                  $81,794   $167,089

    Gross subscriber additions                      1,338,961  2,041,656
    SAC, as adjusted, per gross subscriber addition       $61        $82

(5) Customer service and billing expenses, as adjusted, per average subscriber is derived from total customer service and billing expenses, excluding share-based payment expense, divided by the number of months in the period, 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
                                                          Three Months Ended
                                                               March 31,
                                                           2009        2008

    Customer service and billing expenses                 $59,918     $61,232
    Less: share-based payment expense                        (656)     (1,165)
    Customer service and billing expenses, as adjusted    $59,262     $60,067

    Daily weighted average number of subscribers       18,713,485  17,615,684
    Customer service and billing expenses, as adjusted,
     per average subscriber                                 $1.06       $1.14

(6) Free cash flow is calculated as follows:

                                             Unaudited Pro Forma
                                             Three Months Ended
                                                  March 31,
                                               2009       2008

    Net cash used in operating activities    $66,871  $(246,988)
    Additions to property and equipment      (71,140)   (56,093)
    Merger related costs                         623    (10,018)
    Restricted and other investment activity       -      2,000
    Free cash flow                           $(3,646) $(311,099)

(7) Average self-pay monthly 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 share-based payment 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 share-based payment 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 loss before interest and investment income, interest expense net of amounts capitalized, income tax expense, loss from redemption of debt, loss on investments, other expense (income), restructuring and related cost, depreciation and amortization, and share related payment expense as adjusted income (loss) from operations. Adjusted income (loss) from operations is not a measure of financial performance under U.S. 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 is useful given the non-recurring nature of these transactions. We also believe the exclusion of share-based payment 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 amortization and share-based payment 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, and share-based payment 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 condensed 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 (see footnotes for reconciliation of the pro forma amounts to their respective GAAP amounts):

                                                        Unaudited Pro Forma
                                                         Three Months Ended
                                                              March 31,
     (in thousands)                                        2009       2008

    Reconciliation of Net loss to Adjusted income (loss) from operations:
      Net loss                                          $(62,877) $(233,387)
    Add back Net loss items excluded from Adjusted
     income (loss) from operations:
      Interest and investment income                        (738)    (4,477)
      Interest expense, net of amounts capitalized        72,392     47,002
      Income tax expense                                   1,115        874
      Loss from redemption of debt                        17,957          -
      Loss on investments                                  7,906      4,177
      Other expense (income)                                (511)     3,502
        Income (loss) from operations                     35,244   (182,309)
      Restructuring and related costs                        614          -
      Depreciation and amortization                       51,483     72,389
      Share-based payment expense                         21,500     39,766

    Adjusted income (loss) from operations              $108,841   $(70,154)

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 condensed 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.

(9) The following tables reconcile our GAAP results of operations to our non-GAAP pro forma unadjusted results of operations.

                                     Unaudited For the Three Months Ended
                                                March 31, 2009

                                                        Allocation
                                              Purchase  of Share-
                                               Price      based
                                       As    Accounting  Payment  Pro
                                   Reported Adjustments  Expense  Forma
    Revenue:
        Subscriber revenue,
         including effects of
         rebates                    $556,392   $16,689       $-  $573,081
        Advertising revenue, net
         of agency fees               12,304         -        -    12,304
        Equipment revenue              9,909         -        -     9,909
        Other revenue                  8,374     1,812        -    10,186
    Total revenue                    586,979    18,501        -   605,480
    Operating expenses (excludes
     depreciation and amortization
     shown separately below) (1)
        Cost of services:
            Satellite and
             transmission             20,279       327     (865)   19,741
            Programming and content   80,408    18,890   (2,620)   96,678
            Revenue share and
             royalties               100,466    20,795        -   121,261
            Customer service and
             billing                  59,801       117     (656)   59,262
            Cost of equipment          7,993         -        -     7,993
        Sales and marketing           51,830     3,658   (4,480)   51,008
        Subscriber acquisition
         costs                        73,068    10,642        -    83,710
        General and administrative    59,314       472  (11,211)   48,575
        Engineering, design and
         development                   9,778       301   (1,668)    8,411
        Depreciation and
         amortization                 82,367   (30,884)       -    51,483
        Share-based payment expense        -         -   21,500    21,500
        Restructuring and related
         costs                           614         -        -       614
    Total operating expenses         545,918    24,318        -   570,236
        Income (loss) from
         operations                   41,061    (5,817)       -    35,244
    Other income (expense)
        Interest and investment
         income                          738         -        -       738
        Interest expense, net of
         amounts capitalized         (65,743)   (6,649)       -   (72,392)
        Loss from redemption of
         debt                        (17,957)        -        -   (17,957)
        Loss on investments           (7,906)        -        -    (7,906)
        Other (expense) income           511         -        -       511
    Total other expense              (90,357)   (6,649)       -   (97,006)
        Loss before income taxes     (49,296)  (12,466)       -   (61,762)
        Income tax expense            (1,115)        -        -    (1,115)
            Net loss                $(50,411) $(12,466)      $-  $(62,877)

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

    Satellite and transmission          $758      $107       $-      $865
    Programming and content            2,489       131        -     2,620
    Customer service and billing         539       117        -       656
    Sales and marketing                4,287       193        -     4,480
    Subscriber acquisition costs           -         -        -         -
    General and administrative        10,739       472        -    11,211
    Engineering, design and
     development                       1,367       301        -     1,668

    Total share-based payment
     expense                         $20,179    $1,321       $-   $21,500


                                       Unaudited For the Three Months Ended
                                                   March 31, 2008

                                                            Allocation
                                                            of Share-
                                                Predecessor   based
                                          As    Financial    Payment  Pro
                                       Reported Adjustments  Expense  Forma

    Revenue:
        Subscriber revenue,
         including effects of
         rebates                      $255,640   $280,869       $-   $536,509
        Advertising revenue, net of
         agency fees                     8,408      9,118        -     17,526
        Equipment revenue                6,063      4,321        -     10,384
        Other revenue                      239     14,146        -     14,385
    Total revenue                      270,350    308,454        -    578,804
    Operating expenses (excludes
     depreciation and amortization
     shown separately below) (1)
        Cost of services:
            Satellite and
             transmission                7,822     20,141   (2,232)    25,731
            Programming and content     61,692     51,562   (5,332)   107,922
            Revenue share and
             royalties                  42,320     68,822        -    111,142
            Customer service and
             billing                    26,922     34,310   (1,165)    60,067
            Cost of equipment            7,588      8,551        -     16,139
        Sales and marketing             38,467     49,505   (8,892)    79,080
        Subscriber acquisition costs    89,824     71,524      (14)   161,334
        General and administrative      48,778     41,220  (18,520)    71,478
        Engineering, design and
         development                     8,656     11,020   (3,611)    16,065
        Depreciation and
         amortization                   26,906     45,483        -     72,389
        Share-based payment expense          -          -   39,766     39,766

    Total operating expenses           358,975    402,138        -    761,113
        Loss from operations           (88,625)   (93,684)       -   (182,309)
    Other income (expense)
        Interest and investment
         income                          2,802      1,675        -      4,477
        Interest expense, net of
         amounts capitalized           (17,675)   (29,327)       -    (47,002)
        Loss from redemption of debt         -          -        -          -
        Loss on investments                  -     (4,177)       -     (4,177)
        Other (expense) income             (77)    (3,425)       -     (3,502)
    Total other expense                (14,950)   (35,254)       -    (50,204)
        Loss before income taxes      (103,575)  (128,938)       -   (232,513)
        Income tax expense                (543)      (331)       -       (874)
            Net loss                 $(104,118) $(129,269)      $-  $(233,387)

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

    Satellite and transmission            $797     $1,435       $-     $2,232
    Programming and content              2,789      2,543        -      5,332
    Customer service and billing           276        889        -      1,165
    Sales and marketing                  5,240      3,652        -      8,892
    Subscriber acquisition costs            14          -        -         14
    General and administrative          11,998      6,522        -     18,520
    Engineering, design and
     development                         1,148      2,463        -      3,611

    Total share-based payment
     expense                           $22,262    $17,504       $-    $39,766

(10) The following table reconciles our GAAP Net loss attributable to common stockholders to our non-GAAP Net loss before preferred stock beneficial conversion feature and Net loss before preferred stock beneficial conversion feature per common share (basic and diluted).

                                                          For the Three
                                                             Months
                                                         Ended March 31,
    (in thousands, except per share data)               2009       2008

    Net loss attributable to common stockholders      $(236,599) $(104,118)
    Less: Preferred stock beneficial conversion
     feature                                           (186,188)         -

    Net loss before preferred stock beneficial
     conversion feature                                $(50,411) $(104,118)
    Net loss before preferred stock beneficial
     conversion feature per common share (basic and
     diluted)                                            $(0.01)    $(0.07)

    Weighted average common shares outstanding
     (basic and diluted)                              3,523,888  1,475,496



About SIRIUS XM Radio

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

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®, 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®, NASCAR®, NBA, NHL®, and PGA TOUR®, 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® 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 "will likely result," " are expected to," "anticipate," "believe," "plan," "estimate," "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: our substantial indebtedness; 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; the useful life of our satellites; our dependence upon automakers and other third parties; our competitive position versus other forms of audio and video entertainment; and general economic conditions. 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 and XM's Annual Report on Form 10-K for the year ended December 31, 2008, 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.

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://shop.sirius.com

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