Investor Relations

SiriusXM Reports First Quarter 2011 Results

- Subscribers Reach New High of 20.6 Million; 373,000 Net Subscriber Additions in First Quarter
- Revenue of $724 Million, Up 9% Over First Quarter 2010
- Record Adjusted EBITDA of $181 Million, Up 15% Over First Quarter 2010
- Free Cash Flow Improves $110 Million Year-Over-Year

NEW YORK, May 3, 2011 /PRNewswire/ -- Sirius XM Radio (NASDAQ: SIRI) today announced first quarter 2011 results, including revenue of $724 million, up 9% over first quarter 2010 revenue of $664 million, and adjusted EBITDA of $181 million, up 15% from $158 million in the first quarter of 2010.

(Logo: http://photos.prnewswire.com/prnh/20101014/NY82093LOGO )

"SiriusXM's first quarter results have put us on track to attain our full year goals for subscriber, revenue, and adjusted EBITDA growth. Significantly, we are now in a position to raise our free cash flow estimate for the year," said Mel Karmazin, Chief Executive Officer, SiriusXM. "Consumers are buying cars again and demand for our product is strong. Were it not for the OEM supply chain uncertainty resulting from the tragedy in Japan, we would be in a position to raise our subscriber guidance today."

Other highlights from the quarter include:

  • Subscriber growth accelerates. Strong auto sales drove net subscriber additions in the first quarter of 2011 to 373,064, up 118% from 171,441 in the first quarter of 2010. Ending subscribers as of March 31, 2011 were 20,564,028, up 9% from the 18,944,199 subscribers reported as of March 31, 2010.  
  • SAC improves. Subscriber acquisition cost (SAC) per gross subscriber addition was $57 in the first quarter of 2011, a 3% improvement from the $59 reported in the first quarter of 2010.  
  • Churn stable. Average self-pay monthly customer churn was 2.0% in the first quarter 2011, in-line with the first quarter 2010 monthly average of 2.0%.

"We operate in a highly competitive audio entertainment marketplace, where there are more choices than ever before, yet consumers continue to choose SiriusXM. We continue to invest in content, expand distribution and improve our technology to deliver the most compelling value proposition possible to consumers across the country," Karmazin added.

Free cash flow in the first quarter of 2011 was ($17) million, a $110 million improvement from the ($127) million recorded in the first quarter 2010. These improvements were driven by declines in satellite capital expenditures and improved adjusted EBITDA. Net income in the first quarters of 2011 and 2010 was $78 million and $42 million, respectively, or $0.01 per diluted share in each period.  

"We ended the first quarter with $434 million of cash and cash equivalents after deploying approximately $135 million to repurchase debt. In April, we repurchased approximately $74 million of our 3.25% Convertible Notes due 2011 via a cash tender offer," said David Frear, SiriusXM's Executive Vice President and Chief Financial Officer.  "We continue to make progress toward reaching our leverage target. Our net debt to adjusted EBITDA declined to 4.1x at the end of the first quarter of 2011 from 6.6x at the end of the first quarter of 2010."

The discussion of adjusted EBITDA excludes the effects of stock-based compensation and certain purchase price accounting adjustments. A reconciliation of non-GAAP items to their nearest GAAP equivalent is contained in the financial supplements included with this release.

2011 GUIDANCE

In 2011, we continue to expect full-year revenue of approximately $3 billion. Our adjusted EBITDA projection remains at approximately $715 million. Full year self-pay churn and conversion rates for 2011 should be broadly similar to those seen in 2010, and we continue to expect to grow our net new subscribers by 1.4 million in 2011. Free cash flow in 2011 should approach $350 million as compared to previous guidance for free cash flow approaching $300 million.

FIRST QUARTER 2011 RESULTS

Subscriber Data.

The following table contains actual subscriber data for the three months ended March 31, 2011 and 2010, respectively:


Unaudited


For the Three Months Ended March 31,


2011


2010









Beginning subscribers

20,190,964


18,772,758

Gross subscriber additions

2,052,367


1,720,848

Deactivated subscribers

(1,679,303)


(1,549,407)

Net additions

373,064


171,441

Ending subscribers

20,564,028


18,944,199





Self-pay

16,807,643


15,773,671

Paid promotional

3,756,385


3,170,528

Ending subscribers

20,564,028


18,944,199





Self-pay

120,844


69,739

Paid promotional

252,220


101,702

Net additions

373,064


171,441





Daily weighted average number of subscribers

20,233,144


18,783,263





Average self-pay monthly churn (1)

2.0%


2.0%





Conversion rate (2)

44.7%


45.2%



____________

See accompanying footnotes.

Subscribers. The improvement was due to the 19% increase in gross subscriber additions, primarily resulting from an increase in U.S. light vehicle sales, new vehicle penetration and returning activations.

Average Self-pay Monthly Churn. While churn remained flat, changes in vehicle ownership were offset by reductions in non-pay cancellation rates.

Conversion Rate. The decrease was primarily due to changing mix of sales among auto manufacturers.

Metrics.

The following table contains our key operating metrics based on our unaudited adjusted results of operations for the three months ended March 31, 2011 and 2010, respectively:


Unaudited Adjusted


For the Three Months Ended March 31,

(in thousands, except for per subscriber amounts)

2011


2010



ARPU (3)

$                   11.52


$                   11.48

SAC, per gross subscriber addition (4)

$                        57


$                        59

Customer service and billing expenses, per average




subscriber (5)

$                     1.08


$                     0.99

Free cash flow (6)

$                (16,874)


$              (127,203)

Adjusted total revenue (8)

$               727,561


$               670,563

Adjusted EBITDA (7)

$               181,359


$               157,757



____________

See accompanying footnotes.

ARPU increased by $0.04, primarily driven by an increase in sales of premium services, including "Best of" programming, data services and streaming and an increase in other revenue due to additional subscribers subject to the U.S. Music Royalty Fee, partially offset by an increase in subscriber retention programs and in the number of subscribers on promotional plans.

SAC, Per Gross Subscriber Addition, decreased primarily due to a 19% increase in gross subscribers, lower per radio subsidy rates for certain OEMs and growth in subscriber reactivations and royalties from radio manufacturers, partially offset by an increase in OEM production with factory-installed satellite radios compared to the three months ended March 31, 2010.

Customer Service and Billing Expenses, Per Average Subscriber, increased primarily due to higher call volume and handle time per call, an increase to bad debt expense driven by an alignment of policies and personnel costs, partially offset by lower general operating costs.

Free Cash Flow increased principally as a result of improvements in net cash provided by operating activities and decreases in capital expenditures.  Net cash provided by operating activities increased $56 million to $18 million for the three months ended March 31, 2011, compared to the ($38 million) used in operations for the three months ended March 31, 2010. Capital expenditures for property and equipment for the three months ended March 31, 2011 decreased $64 million to $35 million, compared to $99 million for the three months ended March 31, 2010. The increase in net cash provided by operating activities was primarily the result of higher collections of amounts due from subscribers, the timing of interest payments on our debt, and the early repayment in the first quarter of 2010 of liabilities deferred in 2009 that were scheduled to be repaid, at 15% interest, in monthly installments from April 2010 through March 2011. The decrease in capital expenditures for the three months ended March 31, 2011 was primarily the result of decreased satellite construction and launch expenditures due to the launch in the fourth quarter of 2010 of our XM-5 satellite.

Adjusted Total Revenue. Set forth below are our adjusted total revenue for the three months ended March 31, 2011 and 2010, respectively. Our adjusted total revenue includes the recognition of deferred subscriber revenues acquired in the merger between  SIRIUS and XM (the "Merger") that are not recognized in our results under purchase price accounting and the elimination of the benefit in earnings from deferred revenue associated with our investment in XM Canada acquired in the Merger.


Unaudited


For the Three Months Ended March 31,

(in thousands)

2011


2010



Revenue:


Subscriber revenue, including effects of rebates (GAAP)

$               622,437


$               579,509

Advertising revenue, net of agency fees (GAAP)

16,558


14,527

Equipment revenue (GAAP)

15,867


14,283

Other revenue (GAAP)

68,977


55,465

Total revenue (GAAP)

723,839


663,784

Purchase price accounting adjustments:




Subscriber revenue

1,909


4,966

Other revenue  

1,813


1,813

Adjusted total revenue

$               727,561


$               670,563



For the three months ended March 31, 2011, the increase in subscriber revenue was primarily attributable to a 8% increase in daily weighted average subscribers, an increase in sales of premium services, including "Best of" programming, data services and streaming. The increase in other revenue was driven by additional subscribers subject to the U.S. Music Royalty Fee and increased royalty revenue from Sirius Canada.

Adjusted EBITDA.  EBITDA is defined as net income (loss) before interest and investment income (loss); interest expense, net of amounts capitalized; income tax expense and depreciation and amortization.  Adjusted EBITDA removes the impact of other income and expense, losses on extinguishment of debt as well as certain other charges, such as, goodwill impairment; certain purchase price accounting adjustments and share-based payment expense.


Unaudited Adjusted


For the Three Months Ended March 31,

(in thousands)

2011


2010





Total revenue

$               727,561


$               670,563

Operating expenses:




Revenue share and royalties

136,862


123,539

Programming and content

83,273


90,471

Customer service and billing

65,487


55,577

Satellite and transmission

18,232


19,389

Cost of equipment

6,405


7,919

Subscriber acquisition costs

126,926


107,045

Sales and marketing

49,156


49,942

Engineering, design and development

10,024


9,826

General and administrative

49,837


49,098

Total operating expenses

546,202


512,806

Adjusted EBITDA

$               181,359


$               157,757



For the three months ended March 31, 2011, the increase in adjusted EBITDA was primarily due to an increase of 9%, or $57 million, in adjusted revenues, partially offset by an increase of 7%, or $33 million, in expenses included in adjusted EBITDA. The increase in revenue was primarily due to the increase in our subscriber base and by additional subscribers subject to the U.S. Music Royalty Fee. The increase in expenses was primarily driven by higher subscriber acquisition costs related to the 19% increase in gross additions, higher revenue share and royalties expenses associated with growth in revenues subject to revenue sharing and royalty arrangements, and increased customer service and billing expenses associated with subscriber growth, partially offset by lower programming and content costs.

SIRIUS XM RADIO INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS


Unaudited Actual


For the Three Months


Ended March 31,

(in thousands, except per share data)

2011


2010

Revenue:




Subscriber revenue

$               622,437


$                 579,509

Advertising revenue, net of agency fees

16,558


14,527

Equipment revenue

15,867


14,283

Other revenue

68,977


55,465

Total revenue

723,839


663,784

Operating expenses:




Cost of services:




Revenue share and royalties

106,929


98,184

Programming and content

72,959


78,434

Customer service and billing

65,836


56,211

Satellite and transmission

18,560


20,119

Cost of equipment

6,405


7,919

Subscriber acquisition costs

105,270


89,379

Sales and marketing

47,819


49,117

Engineering, design and development

11,135


11,436

General and administrative

56,354


57,580

Depreciation and amortization

68,400


70,265

Total operating expenses

559,667


538,644

Income from operations

164,172


125,140

Other income (expense):




Interest expense, net of amounts capitalized

(78,218)


(77,868)

Loss on extinguishment of debt and credit facilities, net

(5,994)


(2,450)

Interest and investment loss

(1,884)


(3,270)

Other income

1,617


1,213

Total other expense

(84,479)


(82,375)

Income before income taxes

79,693


42,765

Income tax expense

(1,572)


(1,167)

Net income  

$                 78,121


$                   41,598

Net income per common share:




Basic

$                     0.02


$                       0.01

Diluted

$                     0.01


$                       0.01

Weighted average common shares outstanding:




Basic

3,735,136


3,677,897

Diluted

6,481,384


6,335,114



SIRIUS XM RADIO INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS


March 31, 2011


December 31, 2010


(unaudited)



(in thousands, except share and per share data)




ASSETS




Current assets:




Cash and cash equivalents

$                 433,695


$                586,691

Accounts receivable, net

100,744


121,658

Receivables from distributors

76,558


67,576

Inventory, net

29,248


21,918

Prepaid expenses

175,829


134,994

Related party current assets

5,943


6,719

Deferred tax asset

52,254


44,787

Other current assets

4,243


7,432

Total current assets

878,514


991,775

Property and equipment, net

1,744,539


1,761,274

Long-term restricted investments

3,396


3,396

Deferred financing fees, net

50,954


54,135

Intangible assets, net

2,617,385


2,632,688

Goodwill

1,834,856


1,834,856

Related party long-term assets

32,444


30,162

Other long-term assets

67,332


74,800

Total assets

$              7,229,420


$             7,383,086

LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:




Accounts payable and accrued expenses

$                 483,530


$                593,174

Accrued interest

80,577


72,453

Current portion of deferred revenue

1,252,144


1,201,346

Current portion of deferred credit on executory contracts

278,063


271,076

Current maturities of long-term debt

100,603


195,815

Related party current liabilities

16,583


15,845

Total current liabilities

2,211,500


2,349,709

Deferred revenue

263,230


273,973

Deferred credit on executory contracts

433,456


508,012

Long-term debt

2,666,202


2,695,856

Long-term related party debt

326,589


325,907

Deferred tax liability

923,272


914,637

Related party long-term liabilities

23,823


24,517

Other long-term liabilities

82,722


82,839

Total liabilities

6,930,794


7,175,450





Commitments and contingencies




Stockholders' equity:




Preferred stock, par value $0.001; 50,000,000 authorized at March 31, 2011 and December 31, 2010:




Series A convertible preferred stock ; no shares issued and  outstanding at March 31, 2011




and December 31, 2010

-


-

Convertible perpetual preferred stock, series B-1 (liquidation preference of $13 at March 31, 2011




and December 31, 2010); 12,500,000 shares issued and outstanding at March 31, 2011 and




December 31, 2010

13


13

Convertible preferred stock, series C junior; no shares issued and outstanding at




March 31, 2011 and December 31, 2010

-


-

Common stock, par value $0.001; 9,000,000,000 shares authorized at March 31, 2011 and




December 31, 2010; 3,943,060,217 and 3,933,195,112 shares issued and outstanding at




March 31, 2011 and December 31, 2010

3,943


3,933

Accumulated other comprehensive loss, net of tax

(5,794)


(5,861)

Additional paid-in capital

10,433,396


10,420,604

Accumulated deficit

(10,132,932)


(10,211,053)

Total stockholders' equity

298,626


207,636

Total liabilities and stockholders' equity

$              7,229,420


$             7,383,086



SIRIUS XM RADIO INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS


Unaudited Actual


For the Three Months Ended March 31,

(in thousands)

2011


2010



Cash flows from operating activities:




Net income

$                  78,121


$                 41,598

Adjustments to reconcile net income to net cash provided by (used in) operating activities:




Depreciation and amortization

68,400


70,265

Non-cash interest expense, net of amortization of premium

9,573


11,119

Provision for doubtful accounts

9,623


7,502

Amortization of deferred income related to equity method investment

(694)


(2,194)

Loss on extinguishment of debt and credit facilities, net

5,994


2,450

Loss on investments, net

2,350


2,729

Loss on disposal of assets

266


-

Share-based payment expense

12,856


17,182

Deferred income taxes

1,111


1,167

Other non-cash purchase price adjustments

(66,743)


(58,817)

Changes in operating assets and liabilities:




Accounts receivable

11,291


(9,792)

Receivables from distributors

(8,982)


(6,037)

Inventory

(7,330)


2,225

Related party assets

(3,686)


1,285

Prepaid expenses and other current assets

(39,232)


(14,690)

Long-term restricted investments

-


(10,160)

Other long-term assets

7,617


7,876

Accounts payable and accrued expenses

(110,400)


(115,469)

Accrued interest

8,124


(11,373)

Deferred revenue

39,225


81,034

Related party liabilities

738


(57,207)

Other long-term liabilities

(113)


1,619

Net cash provided by (used in) operating activities

18,109


(37,688)





Cash flows from investing activities:




Additions to property and equipment

(34,983)


(98,965)

Sale of restricted and other investments

-


9,450

Net cash used in investing activities

(34,983)


(89,515)



Cash flows from financing activities:




Proceeds from exercise of stock options

1,072


-

Long-term borrowings, net of costs

-


637,406

Related party long-term borrowings, net of costs

-


147,094

Payment of premiums on redemption of debt

(4,094)


-

Repayment of long-term borrowings

(133,100)


(248,183)

Restricted cash used for the redemption of debt

-


(524,065)

Net cash (used in) provided by financing activities

(136,122)


12,252

Net decrease in cash and cash equivalents

(152,996)


(114,951)

Cash and cash equivalents at beginning of period

586,691


383,489

Cash and cash equivalents at end of period

$                433,695


$               268,538



Footnotes

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

(2)  We measure the percentage of owners and lessees of new vehicles that receive our service and convert to become self-paying subscribers after the initial promotion period. We refer to this as the "conversion rate." At the time satellite radio enabled vehicles are sold or leased, the owners or lessees generally receive trial subscriptions ranging from three to twelve months. 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.

(3)  ARPU is derived from total earned subscriber revenue, net advertising revenue and other subscription-related revenue, net of purchase price accounting adjustments, divided by the number of months in the period, divided by the daily weighted average number of subscribers for the period. Other subscription-related revenue includes the U.S. Music Royalty Fee. Purchase price accounting adjustments include the recognition of deferred subscriber revenues not recognized in purchase price accounting associated with the Merger. ARPU is calculated as follows (in thousands, except for subscriber and per subscriber amounts):


Unaudited


For the Three Months Ended March 31,


2011


2010



Subscriber revenue (GAAP)

$               622,437


$               579,509

Add: net advertising revenue (GAAP)

16,558


14,527

Add: other subscription-related revenue (GAAP)

58,531


47,947

Add: purchase price accounting adjustments

1,909


4,966


$               699,435


$               646,949





Daily weighted average number of subscribers

20,233,144


18,783,263





ARPU

$                   11.52


$                   11.48



(4)  Subscriber acquisition cost, per gross subscriber addition (or SAC, per gross subscriber addition) is derived from subscriber acquisition costs and margins from the direct sale of radios and accessories, excluding purchase price accounting adjustments, divided by the number of gross subscriber additions for the period. Purchase price accounting adjustments associated with the Merger include the elimination of the benefit of amortization of deferred credits on executory contracts recognized at the Merger date attributable to an OEM. SAC, per gross subscriber addition, is calculated as follows (in thousands, except for subscriber and per subscriber amounts):


Unaudited


For the Three Months Ended March 31,


2011


2010



Subscriber acquisition costs (GAAP)

$               105,270


$                 89,379

Less: margin from direct sales of radios and accessories (GAAP)

(9,462)


(6,364)

Add: purchase price accounting adjustments

21,656


17,666


$               117,464


$               100,681





Gross subscriber additions

2,052,367


1,720,848





SAC, per gross subscriber addition

$                        57


$                        59



(5)  Customer service and billing expenses, per average subscriber, is derived from total customer service and billing expenses, excluding share-based payment expense and purchase price accounting adjustments associated with the Merger, divided by the number of months in the period, divided by the daily weighted average number of subscribers for the period. We believe the exclusion of share-based payment expense in our calculation of customer service and billing expenses, per average subscriber, is useful given the significant variation in expense that can result from changes in the fair market value of our common stock, the effect of which is unrelated to the operational conditions that give rise to variations in the components of our customer service and billing expenses. Purchase price accounting adjustments associated with the Merger include the elimination of the benefit associated with incremental share-based payment arrangements recognized at the Merger date. Customer service and billing expenses, per average subscriber, is calculated as follows (in thousands, except for subscriber and per subscriber amounts):


Unaudited


For the Three Months Ended March 31,


2011


2010



Customer service and billing expenses (GAAP)

$                 65,836


$                 56,211

Less: share-based payment expense, net of purchase




price accounting adjustments

(367)


(728)

Add: purchase price accounting adjustments

18


94


$                 65,487


$                 55,577





Daily weighted average number of subscribers

20,233,144


18,783,263





Customer service and billing expenses, per average subscriber

$                     1.08


$                     0.99



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


Unaudited


For the Three Months Ended March 31,


2011


2010



Net cash provided by (used in) operating activities

$                 18,109


$                (37,688)

Additions to property and equipment

(34,983)


(98,965)

Restricted and other investment activity

-


9,450

Free cash flow

$                (16,874)


$              (127,203)



(7)  EBITDA is defined as net income (loss) before interest and investment income (loss); interest expense, net of amounts capitalized; taxes expense and depreciation and amortization. We adjust EBITDA to remove the impact of other income and expense, loss on extinguishment of debt as well as certain other charges discussed below. This measure is one of the primary Non-GAAP financial measures on which we (i) evaluate the performance of our businesses, (ii) base our internal budgets and (iii) compensate management. Adjusted EBITDA is a Non-GAAP financial performance measure that excludes (if applicable):  (i) certain adjustments as a result of the purchase price accounting for the Merger, (ii) goodwill impairment, (iii) restructuring, impairments, and related costs, (iv) depreciation and amortization and (v) share-based payment expense. The purchase price accounting adjustments include: (i) the elimination of deferred revenue associated with the investment in XM Canada, (ii) recognition of deferred subscriber revenues not recognized in purchase price accounting, and (iii) elimination of the benefit of deferred credits on executory contracts, which are primarily attributable to third party arrangements with an OEM and programming providers. We believe adjusted EBITDA is a useful measure of the underlying trend of our operating performance, which provides useful information about our business apart from the costs associated with our physical plant, capital structure and purchase price accounting. We believe investors find this Non-GAAP financial measure useful when analyzing our results and comparing our operating performance to the performance of other communications, entertainment and media companies. We believe investors use current and projected adjusted EBITDA to estimate our current and 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 depreciation expense. The exclusion of depreciation and amortization expense is useful given significant variation in depreciation and amortization expense that can result from the potential variations in estimated useful lives, all of which can vary widely across different industries or among companies within the same industry. 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 value as determined using the Black-Scholes-Merton model which varies based on assumptions used for the expected life, expected stock price volatility and risk-free interest rates.

Adjusted EBITDA has certain limitations in that it does not take into account the impact to our statement of operations of certain expenses, including share-based payment expense and certain purchase price accounting for the Merger. We endeavor to compensate for the limitations of the Non-GAAP measure presented by also providing the comparable GAAP measure with equal or greater prominence and descriptions of the reconciling items, including quantifying such items, to derive the Non-GAAP measure.  Investors that wish to compare and evaluate our operating results after giving effect for these costs, should refer to net income (loss) as disclosed in our consolidated statements of operations. Since adjusted EBITDA is a Non-GAAP financial performance measure, our calculation of adjusted EBITDA 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 net income (loss) to the adjusted EBITDA is calculated as follows (in thousands):


Unaudited


For the Three Months Ended March 31,


2011


2010



Net income (GAAP):

$               78,121


$             41,598

Add back items excluded from Adjusted EBITDA:




Purchase price accounting adjustments:




Revenues

3,722


6,779

Operating expenses

(67,972)


(62,610)

Share-based payment expense, net of purchase price




accounting adjustments

13,037


18,183

Depreciation and amortization (GAAP)

68,400


70,265

Interest expense, net of amounts capitalized (GAAP)

78,218


77,868

Loss on extinguishment of debt and credit facilities, net (GAAP)

5,994


2,450

Interest and investment loss (GAAP)

1,884


3,270

Other income (GAAP)

(1,617)


(1,213)

Income tax expense (GAAP)

1,572


1,167

Adjusted EBITDA

$             181,359


$           157,757



(8)  The following tables reconcile our actual revenues and operating expenses to our adjusted revenues and operating expenses for the three months ended March 31, 2011 and 2010:


Unaudited For the Three Months Ended March 31, 2011

(in thousands)

As Reported


Purchase Price

Accounting

Adjustments


Allocation of

Share-based

Payment Expense


Adjusted









Revenue:








Subscriber revenue, including effects of rebates

$622,437


$1,909


$-


$624,346

Advertising revenue, net of agency fees

16,558


-


-


16,558

Equipment revenue

15,867


-


-


15,867

Other revenue

68,977


1,813


-


70,790

Total revenue

$723,839


$3,722


$-


$727,561

Operating expenses








Cost of services:








Revenue share and royalties

106,929


29,933


-


136,862

Programming and content

72,959


12,824


(2,510)


83,273

Customer service and billing

65,836


18


(367)


65,487

Satellite and transmission

18,560


239


(567)


18,232

Cost of equipment

6,405


-


-


6,405

Subscriber acquisition costs

105,270


21,656


-


126,926

Sales and marketing

47,819


3,212


(1,875)


49,156

Engineering, design and development

11,135


31


(1,142)


10,024

General and administrative

56,354


59


(6,576)


49,837

Depreciation and amortization (a)

68,400


-


-


68,400

Share-based payment expense (b)

-


-


13,037


13,037

Total operating expenses

$559,667


$67,972


$-


$627,639









(a) Purchase price accounting adjustments included above exclude the incremental depreciation and amortization associated with the $785,000 stepped up basis in property, equipment and intangible assets as a result of the Merger. The increased depreciation and amortization for the three months ended March 31, 2011 was $15,000.









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













Programming and content

$2,483


$27


$-


$2,510

Customer service and billing

349


18


-


367

Satellite and transmission

548


19


-


567

Sales and marketing

1,848


27


-


1,875

Engineering, design and development

1,111


31


-


1,142

General and administrative

6,517


59


-


6,576









Total share-based payment expense

$12,856


$181


$-


$13,037




Unaudited For the Three Months Ended March 31, 2010

(in thousands)

As Reported


Purchase Price

Accounting

Adjustments


Allocation of

Share-based

Payment Expense


Adjusted









Revenue:








Subscriber revenue, including effects of rebates

$579,509


$4,966


$-


$584,475

Advertising revenue, net of agency fees

14,527


-


-


14,527

Equipment revenue

14,283


-


-


14,283

Other revenue

55,465


1,813


-


57,278

Total revenue

$663,784


$6,779


$-


$670,563

Operating expenses








Cost of services:








Revenue share and royalties

98,184


25,355


-


123,539

Programming and content

78,434


15,147


(3,110)


90,471

Customer service and billing

56,211


94


(728)


55,577

Satellite and transmission

20,119


323


(1,053)


19,389

Cost of equipment

7,919


-


-


7,919

Subscriber acquisition costs

89,379


17,666


-


107,045

Sales and marketing

49,117


3,525


(2,700)


49,942

Engineering, design and development

11,436


186


(1,796)


9,826

General and administrative

57,580


314


(8,796)


49,098

Depreciation and amortization (a)

70,265


-


-


70,265

Share-based payment expense (b)

-


-


18,183


18,183

Total operating expenses

$538,644


$62,610


$-


$601,254









(a) Purchase price accounting adjustments included above exclude the incremental depreciation and amortization associated with the $785,000 stepped up basis in property, equipment and intangible assets as a result of the Merger. The increased depreciation and amortization for the three months ended March 31, 2010 was $19,000.









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













Programming and content

$2,950


$160


$-


$3,110

Customer service and billing

634


94


-


728

Satellite and transmission

951


102


-


1,053

Sales and marketing

2,555


145


-


2,700

Engineering, design and development

1,610


186


-


1,796

General and administrative

8,482


314


-


8,796









Total share-based payment expense

$17,182


$1,001


$-


$18,183



About Sirius XM Radio

Sirius XM Radio is America's satellite radio company.  SiriusXM broadcasts more than 135 satellite radio channels of commercial-free music, and premier sports, news, talk, entertainment, traffic, weather, and data services to 20.6 million subscribers. SiriusXM offers an array of content from many of the biggest names in entertainment, as well as from professional sports leagues, major colleges, and national news and talk providers.

SiriusXM programming is available on more than 800 devices, including pre-installed and after-market radios in cars, trucks, boats and aircraft, smartphones and mobile devices, and consumer electronics products for homes and offices. SiriusXM programming is also available at siriusxm.com, and on Apple, BlackBerry and Android-powered mobile devices.

SiriusXM has arrangements with every major automaker and its radio products are available for sale at shop.siriusxm.com as well as retail locations nationwide.

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 future financial and operating results, our 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," "will continue," "is anticipated," "estimated," "intend," "plan,"  "projection," "outlook" or words of similar meaning.  Such forward-looking statements are based upon the current beliefs and expectations of our management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are difficult to predict and generally beyond our control.  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 competitive position versus other forms of audio and video entertainment; our ability to retain subscribers and maintain our average monthly revenue per subscriber;  our dependence upon automakers and other third parties; our substantial indebtedness; and the useful life of our satellites, which, in most cases, are not insured.  Additional factors that could cause our results to differ materially from those described in the forward-looking statements can be found in our Annual Report on Form 10-K for the year ended December 31, 2010, 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 we disclaim any intention or obligation to update any forward looking statements as a result of developments occurring after the date of this communication.

Follow SiriusXM on Twitter or like the SiriusXM page on Facebook.

E - SIRI

Contact Information for Investors and Financial Media:

Investors:

Hooper Stevens
212 901 6718
hooper.stevens@siriusxm.com

Media:

Patrick Reilly
212 901 6646
patrick.reilly@siriusxm.com

SOURCE Sirius XM Radio

News Provided by Acquire Media