Investor Relations

SiriusXM Reports Fourth Quarter and Full-Year 2013 Results

- 2013 Record Revenue of $3.8 Billion, Up 12%
- Net Income of $377 Million in 2013
- Adjusted EBITDA Climbs 27% in 2013 to $1.17 Billion
- 2013 Free Cash Flow of $927 Million, Up 31%
- Fourth Quarter Revenue Exceeds $1 Billion, Adjusted EBITDA Climbs 41%

NEW YORK, Feb. 4, 2014 /PRNewswire/ -- SiriusXM today announced fourth quarter and full-year 2013 financial and operating results, including record revenue of $1.0 billion and $3.8 billion in the fourth quarter and full-year, respectively, each up 12%.  Net income for the fourth quarter and full-year were $65 million and $377 million, respectively, or $0.01 and $0.06 per diluted common share, respectively.

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

Income from operations was $245 million and $1.0 billion in the fourth quarter and full-year 2013, respectively.  Adjusted EBITDA increased 41% in the fourth quarter to a record $326 million.  Full-year 2013 adjusted EBITDA was $1.17 billion, an increase of 27% from $920 million in 2012.

"The fourth quarter of 2013 capped a year of records and milestones for SiriusXM.  We delivered our first ever billion dollar revenue quarter, and our first ever quarter with adjusted EBITDA and free cash flow each over $300 million.  Our adjusted EBITDA margin of 32.5% in the fourth quarter was the highest in the history of the Company.  We remain excited about continuing our track record of delivering profitable growth in 2014, with the goal of enhancing free cash flow while making investments in key long-term initiatives," noted Jim Meyer, Chief Executive Officer, SiriusXM.

FOURTH QUARTER 2013 HIGHLIGHTS:

  • Dramatic expansion in adjusted EBITDA.  Adjusted EBITDA climbed by 41% year-over-year in the fourth quarter to a single quarter high of $326 million.  Adjusted EBITDA margin reached a record high of 32.5% in the quarter.
  • Subscriber acquisition costs decline.  Total subscriber acquisition costs were $124 million in the fourth quarter, or just 12% of adjusted revenue, the lowest percentage in the Company's history.  The improvement in SAC was driven by lower subsidy rates per vehicle.  SAC per gross addition was $44, a record low, a decline of 19% versus the fourth quarter of 2012.
  • All-time high self-pay subscribers.  Self-pay subscriber net additions were 411,484 in the fourth quarter, resulting in an all-time high self-pay subscriber base of 21.1 million at year end, up 8% year-over-year.  Paid promotional subscribers declined from the third quarter by 434,240 as a major OEM shifted to unpaid trials during the period, resulting in the one-time decline.

FULL-YEAR 2013 HIGHLIGHTS:

  • Continued subscriber growth.  Total net subscriber additions for the full-year were 1,658,974, taking total paid subscribers to 25.6 million at year-end, up 7% from 23.9 million subscribers at year-end 2012.
  • Adjusted EBITDA reaches new record high. Adjusted EBITDA grew by 27% to a record high of $1.17 billion.  The growth in adjusted EBITDA was attributable to a 12% increase in revenue, while cash operating expenses were held to a 6% increase.
  • Free cash flow rises 31%.  Free cash flow grew to $927 million in 2013, a 31% rise from $709 million in 2012.  Free cash flow per diluted common share grew by 41% to $0.15 in 2013 from $0.10 in 2012 as the Company reduced its shares outstanding through its common stock repurchase program.

"During the fourth quarter, we completed the first $160 million of the $500 million of share repurchases from Liberty Media, bringing our total 2013 share repurchases to 520 million shares for $1.76 billion, leaving over $2.2 billion remaining under our current authorization," said David Frear, Chief Financial Officer, SiriusXM.

"Our debt to adjusted EBITDA was just 3.1 times at the end of 2013, including $500 million of deep in-the-money convertible notes.  With our recently raised leverage target of 4.0 times and our free cash flow guidance, SiriusXM has $3.5 billion of capacity to pursue capital returns and acquisitions," added Frear.

2014 GUIDANCE

  • The Company's existing 2014 guidance was reiterated:
  • Revenue of over $4 billion,
  • Net subscriber additions of approximately 1.25 million,
  • Adjusted EBITDA of approximately $1.38 billion, and
  • Free cash flow approaching $1.1 billion.

FOURTH QUARTER AND FULL-YEAR 2013 RESULTS

 

SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


















For the Three Months Ended
December 31,


For the Twelve Months Ended
December 31,

(in thousands, except per share data)

2013


2012


2013


2012


(Unaudited)


(Unaudited)





Revenue:








Subscriber revenue

$           852,547


$           774,466


$      3,284,660


$       2,962,665

Advertising revenue

25,402


22,438


89,288


82,320

Equipment revenue

25,985


22,273


80,573


73,456

Other revenue

96,144


73,238


344,574


283,599

Total revenue

1,000,078


892,415


3,799,095


3,402,040

Operating expenses:








Cost of services:








Revenue share and royalties

210,625


141,641


677,642


551,012

Programming and content

73,010


73,795


290,323


278,997

Customer service and billing

83,749


82,346


320,755


294,980

Satellite and transmission

20,251


18,635


79,292


72,615

Cost of equipment

8,669


12,465


26,478


31,766

Subscriber acquisition costs

124,050


126,683


495,610


474,697

Sales and marketing

81,430


72,446


291,024


248,905

Engineering, design and development

15,068


16,374


57,969


48,843

General and administrative

77,522


68,120


262,135


261,905

Depreciation and amortization

60,348


66,814


253,314


266,295

Total operating expenses

754,722


679,319


2,754,542


2,530,015

Income from operations

245,356


213,096


1,044,553


872,025

Other income (expense):








Interest expense, net of amounts capitalized

(54,140)


(45,545)


(204,671)


(265,321)

Loss on extinguishment of debt and credit facilities, net

(66,229)


-


(190,577)


(132,726)

Interest and investment income 

3,328


3,907


6,976


716

Loss on change in value of derivatives 

(20,393)


-


(20,393)


-

Other income (loss) 

295


412


1,204


(226)

Total other expense

(137,139)


(41,226)


(407,461)


(397,557)

Income before income taxes

108,217


171,870


637,092


474,468

Income tax (expense) benefit

(43,020)


(15,626)


(259,877)


2,998,234

Net income

$             65,197


$           156,244


$         377,215


$       3,472,702

Foreign currency translation adjustment, net of tax

(136)


87


(428)


49

Comprehensive income

$             65,061


$           156,331


$         376,787


$       3,472,751

Net income per common share:








Basic

$                 0.01


$                 0.02


$               0.06


$                0.55

Diluted

$                 0.01


$                 0.02


$               0.06


$                0.51

Weighted average common shares outstanding:








Basic

6,113,889


5,218,827


6,227,646


4,209,073

Diluted

6,203,674


6,634,911


6,384,791


6,873,786









 

 

SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS




As of December 31,


2013


2012

(in thousands, except share and per share data)




ASSETS




Current assets:




Cash and cash equivalents

$                       134,805


$                       520,945

Accounts receivable, net

103,937


106,142

Receivables from distributors

88,975


104,425

Inventory, net

13,863


25,337

Prepaid expenses

110,530


122,157

Related party current assets

9,145


13,167

Deferred tax asset

937,598


923,972

Other current assets

20,160


12,037

Total current assets

1,419,013


1,828,182

Property and equipment, net

1,594,574


1,571,922

Long-term restricted investments

5,718


3,999

Deferred financing fees, net

12,604


38,677

Intangible assets, net

2,700,062


2,519,610

Goodwill

2,204,553


1,815,365

Related party long-term assets

30,164


44,954

Long-term deferred tax asset

868,057


1,219,256

Other long-term assets

10,035


12,878

Total assets

$                    8,844,780


$                    9,054,843

LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:




Accounts payable and accrued expenses

$                       578,333


$                       587,652

Accrued interest

42,085


33,954

Current portion of deferred revenue

1,586,611


1,474,138

Current portion of deferred credit on executory contracts

3,781


207,854

Current maturities of long-term debt

496,815


4,234

Current maturities of long-term related party debt

10,959


-

Related party current liabilities

20,320


6,756

Total current liabilities

2,738,904


2,314,588

Deferred revenue

149,026


159,501

Deferred credit on executory contracts

1,394


5,175

Long-term debt

3,093,821


2,222,080

Long-term related party debt

-


208,906

Related party long-term liabilities

16,337


18,966

Other long-term liabilities

99,556


86,062

Total liabilities

6,099,038


5,015,278

Stockholders' equity:




Convertible perpetual preferred stock, series B-1 par value $0.001 (liquidation preference of $0.001 per share); 50,000,000 authorized and 0 and 6,250,100 shares issued and outstanding at December 31, 2013 and 2012, respectively

-


6

Common stock, par value $0.001; 9,000,000,000 shares authorized at December 31, 2013 and 2012; 6,096,220,526 and 5,262,440,085 shares issued and outstanding at December 31, 2013 and 2012, respectively

6,096


5,263

Accumulated other comprehensive (loss) income, net of tax

(308)


120

Additional paid-in capital

8,674,129


10,345,566

Accumulated deficit

(5,934,175)


(6,311,390)

Total stockholders' equity

2,745,742


4,039,565

Total liabilities and stockholders' equity

$                    8,844,780


$                    9,054,843





 

 

SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS




For the Years Ended December 31,

(in thousands)

2013


2012

Cash flows from operating activities:




Net income

$                      377,215


$                   3,472,702

Adjustments to reconcile net income to net cash provided by operating activities:




Depreciation and amortization

253,314


266,295

Non-cash interest expense, net of amortization of premium

21,698


35,924

Provision for doubtful accounts

39,016


34,548

Amortization of deferred income related to equity method investment

(2,776)


(2,776)

Loss on extinguishment of debt and credit facilities, net

190,577


132,726

(Gain) loss on unconsolidated entity investments, net

(5,865)


420

Dividend received from unconsolidated entity investment

22,065


1,185

Loss on disposal of assets

351


657

Loss on change in value of derivatives

20,393


-

Share-based payment expense

68,876


63,822

Deferred income taxes

259,787


(3,001,818)

Other non-cash purchase price adjustments

(207,854)


(289,050)

Changes in operating assets and liabilities:




Accounts receivable

(36,189)


(38,985)

Receivables from distributors

20,944


(19,608)

Inventory

11,474


11,374

Related party assets

2,031


9,523

Prepaid expenses and other current assets

16,788


647

Other long-term assets

2,973


22,779

Accounts payable and accrued expenses

(44,009)


46,043

Accrued interest

8,131


(36,451)

Deferred revenue

73,593


101,311

Related party liabilities

(1,991)


(7,545)

Other long-term liabilities

12,290


3,042

Net cash provided by operating activities

1,102,832


806,765





Cash flows from investing activities:




Additions to property and equipment

(173,617)


(97,293)

Purchase of restricted and other investments

(1,719)


(26)

Acquisition of business, net of cash acquired 

(525,352)


-

Net cash used in investing activities

(700,688)


(97,319)





Cash flows from financing activities:




Proceeds from exercise of stock options

21,968


123,369

Taxes paid in lieu of shares issued for stock-based compensation

(46,342)


-

Proceeds from long-term borrowings and revolving credit facility, net of costs

3,156,063


383,641

Payment of premiums on redemption of debt

(175,453)


(100,615)

Repayment of long-term borrowings and revolving credit facility

(1,782,160)


(915,824)

Repayment of related party long-term borrowings

(200,000)


(126,000)

Common stock repurchased and retired

(1,762,360)


-

Dividends paid

-


(327,062)

Net cash used in financing activities

(788,284)


(962,491)

Net decrease in cash and cash equivalents

(386,140)


(253,045)

Cash and cash equivalents at beginning of period

520,945


773,990

Cash and cash equivalents at end of period

$                      134,805


$                      520,945





 

Subscriber Data and Operating Metrics          

The following table contains subscriber data and key operating metrics for the three and twelve months ended December 31, 2013 and 2012, respectively. Subscribers to our connected vehicle services are not included in our subscriber count:

 


Unaudited


For the Three Months Ended December 31,


For the Twelve Months Ended December 31,


2013


2012


2013


2012









Beginning subscribers

25,582,066


23,365,383


23,900,336


21,892,824

Gross subscriber additions

2,409,804


2,553,489


10,136,381


9,617,771

Deactivated subscribers

(2,432,560)


(2,018,536)


(8,477,407)


(7,610,259)

Net additions

(22,756)


534,953


1,658,974


2,007,512

Ending subscribers

25,559,310


23,900,336


25,559,310


23,900,336









Self-pay

21,081,817


19,570,274


21,081,817


19,570,274

Paid promotional

4,477,493


4,330,062


4,477,493


4,330,062

Ending subscribers

25,559,310


23,900,336


25,559,310


23,900,336









Self-pay

411,484


528,755


1,511,543


1,661,532

Paid promotional

(434,240)


6,198


147,431


345,980

Net additions

(22,756)


534,953


1,658,974


2,007,512









Daily weighted average number of subscribers

25,596,580


23,612,076


24,886,300


22,794,170









Average self-pay monthly churn

1.9%


1.8%


1.8%


1.9%









New vehicle consumer conversion rate

42%


44%


44%


45%









ARPU

$                        12.46


$                        12.12


$                        12.27


$                        12.00

SAC, per gross subscriber addition

$                             44


$                             54


$                             50


$                             54

 

Glossary

Adjusted EBITDA - EBITDA is defined as net income before interest and investment income (loss); interest expense, net of amounts capitalized; income tax expense and depreciation and amortization. We adjust EBITDA to remove the impact of other income and expense, loss on extinguishment of debt, loss on change in value of derivatives 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 of Sirius and XM, (ii) depreciation and amortization and (iii) 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 statements of comprehensive income of certain expenses, including share-based payment expense and certain purchase price accounting for the merger of Sirius and XM. 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 as disclosed in our consolidated statements of comprehensive income. 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 to the adjusted EBITDA is calculated as follows (in thousands):

 


Unaudited


For the Three Months Ended
December 31,


For the Twelve Months Ended
December 31,


2013


2012


2013


2012









Net income (GAAP):

$             65,197


$           156,244


$           377,215


$        3,472,702

Add back items excluded from Adjusted EBITDA:








Purchase price accounting adjustments:








Revenues

1,813


1,880


7,251


7,479

Operating expenses

(1,068)


(68,781)


(207,854)


(289,278)

Share-based payment expense (GAAP)

19,102


17,462


68,876


63,822

Depreciation and amortization (GAAP)

60,348


66,814


253,314


266,295

Interest expense, net of amounts capitalized (GAAP)

54,140


45,545


204,671


265,321

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

66,229


-


190,577


132,726

Interest and investment income (GAAP)

(3,328)


(3,907)


(6,976)


(716)

Loss on change in value of derivatives (GAAP)

20,393


-


20,393


-

Other (income) loss (GAAP)

(295)


(412)


(1,204)


226

Income tax expense (benefit) (GAAP)

43,020


15,626


259,877


(2,998,234)

Adjusted EBITDA

$           325,551


$           230,471


$        1,166,140


$           920,343

 

Adjusted Revenues and Operating Expenses - We define this Non-GAAP financial measure as our actual revenues and operating expenses adjusted to exclude the impact of certain purchase price accounting adjustments and share-based payment expense. We use this Non-GAAP financial measure to manage our business, set operational goals and as a basis for determining performance-based compensation for our employees.  The following tables reconcile our actual revenues and operating expenses to our adjusted revenues and operating expenses for the three and twelve months ended December 31, 2013 and 2012:

 


Unaudited For the Three Months Ended December 31, 2013

(in thousands)

As Reported


Purchase Price
Accounting
Adjustments


Allocation of
Share-based
Payment Expense


Adjusted









Revenue:








Subscriber revenue

$               852,547


$                         -


$                         -


$               852,547

Advertising revenue

25,402


-


-


25,402

Equipment revenue

25,985


-


-


25,985

Other revenue

96,144


1,813


-


97,957

Total revenue

$            1,000,078


$                   1,813


$                         -


$            1,001,891

Operating expenses








Cost of services:








Revenue share and royalties

210,625


-




210,625

Programming and content

73,010


1,068


(2,071)


72,007

Customer service and billing

83,749


-


(591)


83,158

Satellite and transmission

20,251


-


(961)


19,290

Cost of equipment

8,669


-


-


8,669

Subscriber acquisition costs

124,050


-


-


124,050

Sales and marketing

81,430


-


(4,678)


76,752

Engineering, design and development

15,068


-


(1,947)


13,121

General and administrative

77,522


-


(8,854)


68,668

Depreciation and amortization (a)

60,348


-


-


60,348

Share-based payment expense

-


-


19,102


19,102

Total operating expenses

$               754,722


$                   1,068


$                         -


$               755,790









(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 of Sirius and XM. The increased depreciation and amortization for the three months ended December 31, 2013 was $10,000.

 

 


Unaudited For the Three Months Ended December 31, 2012

(in thousands)

As Reported


Purchase Price
Accounting
Adjustments


Allocation of
Share-based
Payment Expense


Adjusted









Revenue:








Subscriber revenue

$               774,466


$                        67


$                         -


$               774,533

Advertising revenue

22,438


-


-


22,438

Equipment revenue

22,273


-


-


22,273

Other revenue

73,238


1,813


-


75,051

Total revenue

$               892,415


$                   1,880


$                         -


$               894,295

Operating expenses








Cost of services:








Revenue share and royalties

141,641


38,532


-


180,173

Programming and content

73,795


4,781


(1,778)


76,798

Customer service and billing

82,346


-


(521)


81,825

Satellite and transmission

18,635


-


(918)


17,717

Cost of equipment

12,465


-


-


12,465

Subscriber acquisition costs

126,683


21,176


-


147,859

Sales and marketing

72,446


4,292


(2,966)


73,772

Engineering, design and development

16,374


-


(1,771)


14,603

General and administrative

68,120


-


(9,508)


58,612

Depreciation and amortization (a)

66,814


-


-


66,814

Share-based payment expense

-


-


17,462


17,462

Total operating expenses

$               679,319


$                 68,781


$                         -


$               748,100









(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 of Sirius and XM. The increased depreciation and amortization for the three months ended December 31, 2012 was $13,000

 

 


Unaudited For the Year Ended December 31, 2013

(in thousands)

As Reported


Purchase Price
Accounting
Adjustments


Allocation of
Share-based
Payment Expense


Adjusted









Revenue:








Subscriber revenue

$            3,284,660


$                         -


$                         -


$            3,284,660

Advertising revenue

89,288


-


-


89,288

Equipment revenue

80,573


-


-


80,573

Other revenue

344,574


7,251


-


351,825

Total revenue

$            3,799,095


$                   7,251


$                         -


$            3,806,346

Operating expenses








Cost of services:








Revenue share and royalties

677,642


122,534


-


800,176

Programming and content

290,323


8,033


(7,584)


290,772

Customer service and billing

320,755


-


(2,219)


318,536

Satellite and transmission

79,292


-


(3,714)


75,578

Cost of equipment

26,478


-


-


26,478

Subscriber acquisition costs

495,610


64,365


-


559,975

Sales and marketing

291,024


12,922


(14,792)


289,154

Engineering, design and development

57,969


-


(7,405)


50,564

General and administrative

262,135


-


(33,162)


228,973

Depreciation and amortization (a)

253,314


-


-


253,314

Share-based payment expense

-


-


68,876


68,876

Total operating expenses

$            2,754,542


$               207,854


$                         -


$            2,962,396









(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 of Sirius and XM. The increased depreciation and amortization for the year ended December 31, 2013 was $47,000.

 

 


Unaudited For the Year Ended December 31, 2012

(in thousands)

As Reported


Purchase Price
Accounting
Adjustments


Allocation of
Share-based
Payment Expense


Adjusted









Revenue:








Subscriber revenue

$            2,962,665


$                      228


$                         -


$            2,962,893

Advertising revenue

82,320


-


-


82,320

Equipment revenue

73,456


-


-


73,456

Other revenue

283,599


7,251


-


290,850

Total revenue

$            3,402,040


$                   7,479


$                         -


$            3,409,519

Operating expenses








Cost of services:








Revenue share and royalties

551,012


146,601


-


697,613

Programming and content

278,997


37,346


(6,120)


310,223

Customer service and billing

294,980


-


(1,847)


293,133

Satellite and transmission

72,615


-


(3,329)


69,286

Cost of equipment

31,766


-


-


31,766

Subscriber acquisition costs

474,697


90,503


-


565,200

Sales and marketing

248,905


14,828


(10,310)


253,423

Engineering, design and development

48,843


-


(6,238)


42,605

General and administrative

261,905


-


(35,978)


225,927

Depreciation and amortization (a)

266,295


-


-


266,295

Share-based payment expense

-


-


63,822


63,822

Total operating expenses

$            2,530,015


$               289,278


$                         -


$            2,819,293









(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 of Sirius and XM. The increased depreciation and amortization for the year ended December 31, 2012 was $53,000.

 

ARPU - is derived from total earned subscriber revenue, 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 of Sirius and XM. ARPU is calculated as follows (in thousands, except for subscriber and per subscriber amounts):

 


Unaudited


For the Three Months Ended
December 31,


For the Twelve Months Ended
December 31,


2013


2012


2013


2012









Subscriber revenue (GAAP)

$               852,547


$           774,466


$         3,284,660


$         2,962,665

Add: net advertising revenue (GAAP)

25,402


22,438


89,288


82,320

Add: other subscription-related revenue (GAAP)

79,111


61,299


290,895


237,868

Add: purchase price accounting adjustments

-


67


-


228


$               957,060


$           858,270


$         3,664,843


$         3,283,081









Daily weighted average number of subscribers

25,596,580


23,612,076


24,886,300


22,794,170









ARPU

$                   12.46


$               12.12


$                12.27


$                12.00

 

Average self-pay monthly churn - is defined as the monthly average of self-pay deactivations for the period divided by the average number of self-pay subscribers for the period.

Customer service and billing expenses, 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. 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. 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
December 31,


For the Twelve Months Ended
December 31,


2013


2012


2013


2012









Customer service and billing expenses (GAAP)

$          83,749


$          82,346


$        320,755


$        294,980

Less: share-based payment expense (GAAP)

(591)


(521)


(2,219)


(1,847)


$          83,158


$          81,825


$        318,536


$        293,133









Daily weighted average number of subscribers

25,596,580


23,612,076


24,886,300


22,794,170









Customer service and billing expenses, per average subscriber

$              1.08


$              1.16


$              1.07


$              1.07

 

Free cash flow - is derived from cash flow provided by operating activities, capital expenditures and restricted and other investment activity.  The calculation for free cash flow and free cash flow per fully-diluted share are as follows (in thousands, except per share data):

 


Unaudited


For the Three Months Ended
December 31,


For the Twelve Months Ended
December 31,


2013


2012


2013


2012









Cash Flow information








Net cash provided by operating activities

$          358,575


$          293,233


$       1,102,832


$          806,765

Net cash used in investing activities

(580,734)


(23,773)


(700,688)


(97,319)

Net cash used in financing activities

(359,820)


(304,785)


(788,284)


(962,491)

Free Cash Flow








Net cash provided by operating activities

$          358,575


$          293,233


$       1,102,832


$          806,765

Additions to property and equipment

(55,382)


(23,747)


(173,617)


(97,293)

Purchase of restricted and other investments

-


(26)


(1,719)


(26)

Free cash flow

$          303,193


$          269,460


$          927,496


$          709,446









Diluted weighted average common shares outstanding

6,203,674


6,634,911


6,384,791


6,873,786









Free cash flow per fully-diluted share

$                0.05


$                0.04


$                0.15


$                0.10

 

New vehicle consumer conversion rate - is defined as 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. 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. The metric excludes rental and fleet vehicles.

Subscriber acquisition cost, per gross subscriber addition - or SAC, per gross subscriber addition, is derived from subscriber acquisition costs and margins from the 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 of Sirius and XM 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
December 31,


For the Twelve Months Ended
December 31,


2013


2012


2013


2012









Subscriber acquisition costs (GAAP)

$        124,050


$         126,683


$      495,610


$        474,697

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

(17,316)


(9,808)


(54,095)


(41,690)

Add: purchase price accounting adjustments

-


21,176


64,365


90,503


$        106,734


$         138,051


$      505,880


$        523,510









Gross subscriber additions

2,409,804


2,553,489


10,136,381


9,617,771









SAC, per gross subscriber addition

$                 44


$                  54


$               50


$                 54

 

About SiriusXM

Sirius XM Holdings Inc. (NASDAQ: SIRI) is the world's largest radio broadcaster measured by revenue and has 25.6 million subscribers.  SiriusXM creates and broadcasts commercial-free music; premier sports talk and live events; comedy; news; exclusive talk and entertainment; and the most comprehensive Latin music, sports and talk programming in radio. SiriusXM is available in vehicles from every major car company in the U.S. and from retailers nationwide as well as at shop.siriusxm.com. SiriusXM programming is available through the SiriusXM Internet Radio App for smartphones and other connected devices as well as online at siriusxm.com. SiriusXM also provides premium traffic, weather, data and information services for subscribers in cars, trucks, RVs, boats and aircraft through SiriusXM Traffic™, SiriusXM Travel Link, NavTraffic®, NavWeather™, SiriusXM Aviation, SiriusXM Marine™, Sirius Marine Weather, XMWX Aviation™, and XMWX Marine™.  SiriusXM holds a minority interest in SiriusXM Canada which has more than 2 million subscribers.

On social media, join the SiriusXM community on Facebook, Twitter, Instagram, and YouTube.

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," "believe," "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 statements: our competitive position versus other forms of radio and  audio services; our dependence upon automakers; general economic conditions; failure of our satellites, which, in most cases, are not insured; our ability to attract and retain subscribers at a profitable level; royalties we pay for music rights; the unfavorable outcome of pending or future litigation; rapid technological and industry change; failure of third parties to perform; changes in consumer protection laws and their enforcement; and our substantial indebtedness.  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, 2012, 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.

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 Holdings Inc.

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