XM Satellite Radio Holdings Inc. Announces Second Quarter 2005 Results and Increases Year-end Subscriber Guidance to 6 Million

XM Satellite Radio Holdings Inc. Announces Second Quarter 2005 Results and Increases Year-end Subscriber Guidance to 6 Million

$125 Million in Revenues More than Double Prior Year Period Ends Quarter at 4.4 Million Subs with 647,226 Net Subscriber Additions

WASHINGTON, July 28 /PRNewswire-FirstCall/ -- XM Satellite Radio Holdings Inc. (NASDAQ:XMSR) today reported financial and operating results for the second quarter ended June 30, 2005. For the quarter, XM reported revenue of $125 million, an increase of 136 percent over the $53 million reported in the second quarter 2004. The significant revenue growth was driven by record second quarter net subscriber additions of 647,226, a 55 percent increase over the 418,449 subscribers added in the second quarter 2004. XM ended the quarter with 4,417,490 subscribers compared with 2,100,352 subscribers reported for the second quarter 2004.

(Logo: http://www.newscom.com/cgi-bin/prnh/20000724/XMSATLOGO )

With XM's first half performance and an even stronger outlook for the second half of the year, XM is increasing 2005 subscriber guidance from 5.5 million to 6 million ending subscribers.

XM's net loss for the second quarter 2005 was ($146.6) million, as compared to ($166.1) million in the second quarter 2004. XM reported an EBITDA loss of ($89.9) million for the second quarter 2005 compared to ($107.8) million for the second quarter 2004. XM's net loss and EBITDA for the second quarter 2004 each included a ($35.0) million charge for de-leveraging activities.

Efficient Quarterly Subscriber Growth

XM's second quarter subscriber growth was strong across both the retail aftermarket and automotive distribution channels. Second quarter 2005 Cost Per Gross Addition (CPGA) was $98, an improvement of $3, or 3 percent, from the $101 CPGA reported in the second quarter 2004. XM's CPGA is the fully-loaded cost to acquire each new subscriber, including Subscriber Acquisition Costs (SAC) of $50, as well as advertising and marketing expenses.

Major League Baseball Continues to Drive Subscriber Growth

In April, XM launched comprehensive live game coverage of the 2005 Major League Baseball (MLB) season. During the May/June time period, approximately 23 percent of new aftermarket subscribers surveyed said they decided to become an XM Radio subscriber because of MLB. In addition to MLB, XM began exclusive satellite radio coverage of live races from the Indy Racing League (IRL) and live golf tournament coverage of PGA TOUR events.

Samsung to Manufacture First MP3 Players with Satellite Radio Capability and XM and Napster Partner to Launch the "XM + NAPSTER" Integrated Music Service

Samsung MP3 players with XM capability will be available in two storage capacity sizes and include an XM home accessory kit. The Samsung players incorporate XM's "Connect and Play" Technology and are expected to be available by year-end.

Napster and XM announced "XM + Napster", a service scheduled to launch in the fourth quarter of 2005. The new service represents an integration of XM's satellite radio and Napster's online music services for listening online and on a variety of MP3 players, including the new Samsung MP3 players. XM subscribers will be able to listen to XM programming, mark their favorite music, and purchase and manage content through Napster for future enjoyment and storage on MP3 devices.

In the second quarter, XM also announced an exclusive agreement with Audible, the leader in digital downloading of spoken word content. Using XM/MP3 players, XM subscribers can purchase and download selections from Audible's 70,000 hours of online audiobook and spoken-word programming.

XM Strategic Initiatives to Broaden the Scope and Reach of Satellite Radio

During the quarter, and into July, XM announced a number of strategic initiatives that leverage its existing infrastructure, core competencies and resources.

-- XM's Canadian partner, Canadian Satellite Radio (CSR), was granted a license from the Canadian Radio-television and Telecommunications Commission (CRTC) to deliver satellite radio to Canadians from coast- to-coast.

-- In July, XM announced an agreement to purchase WCS Wireless, a private entity, for 5.5 million shares of XM Common Stock. The principal assets of WCS Wireless are wireless spectrum licenses in geographic areas covering 163 million people throughout the United States, including 15 of the top 20 markets. On average, these licenses cover 10 megahertz in the frequency bands adjacent to XM's satellite radio service. This acquisition will enable XM to potentially double its bandwidth and broaden the existing business with a variety of multimedia subscription services, including video, data and additional audio products. We expect the transaction to close later this year, subject to regulatory approval.

-- In July, XM made a strategic investment of $25 million in the common stock of Worldspace, Inc., a pioneer of satellite radio services in Asia, Europe, India, the Middle East and Africa. In connection with the investment, XM and WorldSpace will cooperate to develop satellite radio products, technology and distribution networks optimized for global markets.

XM, AOL and AEG Partner to Launch "Network Live" and XM and AOL Expand Online Offering

Capitalizing on the huge potential of multi-platform live entertainment programming, XM Satellite Radio, America Online and AEG, a world-leading sports & entertainment presenter, joined with Kevin Wall, Executive Producer of Live 8, to create Network Live. Network Live is the first multi-platform digital entertainment company committed to delivering live entertainment programming through the Internet, satellite radio and other global media platforms such as VOD, wireless and HDTV.

During the quarter, XM and America Online also announced the creation of the world's largest online digital radio network featuring the XM and AOL Radio Network programming. The co-branded service will combine a sampling of 20 XM stations plus 130 AOL Radio stations. In addition, an enhanced premium service with 70 XM stations and more than 130 AOL Radio original and third party stations will be available to AOL members at no additional charge and to consumers on the web for a low monthly fee. This service is expected to launch later this summer.

About XM Satellite Radio

XM is America's number one satellite radio service with more than 4.4 million subscribers. Broadcasting live daily from studios in Washington, DC, New York City and Nashville at the Country Music Hall of Fame, XM's 2005 lineup includes more than 150 digital channels of choice from coast to coast: the most commercial-free music channels, plus premier sports, talk, comedy, children's and entertainment programming; and 21 channels of the most advanced traffic and weather information. XM was named Best Radio Service at the 2004 Billboard Digital Entertainment Awards.

XM, the leader in satellite-delivered entertainment and data services for the automobile market through partnerships with General Motors, Honda, Toyota, Hyundai, Nissan and Volkswagen/Audi, is available in more than 120 different vehicle models for 2005. XM's industry-leading products are available at consumer electronics retailers nationwide. For more information about XM hardware, programming and partnerships, please visit http://www.xmradio.com/.

Net loss before interest income, interest expense, income taxes, depreciation and amortization is commonly referred to in our business as "EBITDA." Consistent with regulatory requirements, EBITDA includes other income (expense). EBITDA is not a measure of financial performance under generally accepted accounting principles. A reconciliation of EBITDA loss is presented on the attachment. We believe EBITDA is often a useful measure of a company's operating performance and is a significant basis used by our management to measure the operating performance of our business. Because we have built our system through the expenditure of large amounts of capital, our results of operations reflect significant charges for depreciation, amortization and interest expense. EBITDA, which excludes this information, provides helpful information about the operating performance of our business, apart from the expense associated with our physical plant or capital structure. EBITDA is frequently used as one of the bases for comparing businesses in our industry, although our measure of EBITDA may not be comparable to similarly titled measures of other companies. EBITDA does not purport to represent operating loss or cash flow from operating activities, as those terms are defined under generally accepted accounting principles, and should not be considered as an alternative to those measurements as an indicator of our performance.

Please note that XM's guidance is comprised of forward-looking statements, and as described in the last paragraph of this press release many factors could cause actual results to differ from this guidance.

Factors that could cause actual results to differ materially from those in the forward-looking statements in this press release include demand for the Company's service, the Company's dependence on technology and third party vendors, its potential need for additional financing, as well as other risks described in XM Satellite Radio Holdings Inc.'s Form 10-K filed with the Securities and Exchange Commission on 3-4-05 and Form 8-K filed with the Securities and Exchange Commission on June 9, 2005. Copies of the filing are available upon request from XM Radio' s Investor Relations Department.

XM SATELLITE RADIO HOLDINGS INC. UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS

(In thousands Except Share and Per Share Amounts)

Three Months ended Six Months ended June 30, June 30, 2005 2004 2005 2004

Revenue: Subscription $113,379 $48,643 $206,360 $88,404 Activation 2,313 1,058 4,337 1,925 Merchandise 3,798 1,054 6,915 1,733 Net ad sales 4,363 1,407 7,488 2,397 Other 1,601 820 2,919 1,488 Total revenue 125,454 52,982 228,019 95,947

Operating expenses:

Cost of revenue: (excludes depreciation & amortization, shown below) Revenue share & royalties 21,071 10,479 40,197 25,957 Customer care & billing 18,488 8,975 33,868 16,060 Cost of merchandise 7,496 1,771 10,583 3,367 Ad sales 1,800 1,357 3,867 2,644 Satellite & terrestrial 10,480 9,822 19,190 19,233 Broadcast & operations: Broadcast 4,053 2,436 7,629 5,099 Operations 6,283 3,049 11,110 6,034 Total broadcast & operations 10,336 5,485 18,739 11,133 Programming & content 24,529 7,116 42,069 14,340

Total cost of revenue 94,200 45,005 168,513 92,734

Research & development (excludes depreciation and amortization, shown below) 6,993 6,731 13,085 12,901 General & administrative (excludes depreciation and amortization, shown below) 10,823 6,527 18,117 12,392 Marketing (excludes depreciation and amortization, shown below): Retention & support 5,080 3,124 9,599 5,923 Subsidies & distribution 48,532 35,303 96,626 70,082 Advertising & marketing 40,872 20,340 67,028 35,019 Marketing 94,484 58,767 173,253 111,024 Amortization of GM liability 9,312 9,313 18,625 18,626 Total marketing 103,796 68,080 191,878 129,650

Depreciation & amortization 36,737 39,557 68,801 79,038

Total operating expenses 252,549 165,900 460,394 326,715

Operating loss (127,095) (112,918) (232,375) (230,768)

Interest income 5,078 1,086 9,102 2,165 Interest expense (24,476) (19,225) (44,501) (47,346) Other income (expense) 453 (34,458) 2,411 (34,072)

Net loss before income taxes (146,040) (165,515) (265,363) (310,021)

Provision for deferred income taxes (579) (579) (1,158) (26,152)

Net Loss (146,619) (166,094) (266,521) (336,173)

8.25% Series B and C preferred stock dividend requirement (2,150) (2,149) (4,299) (4,504)

Net Loss attributable to common stockholders $(148,769) $(168,243) $(270,820) $(340,677)

Basic and diluted net loss per share: $(0.70) $(0.84) $(1.28) $(1.80) Weighted average shares used in computing net loss per share - basic and diluted 213,571,652 200,616,663 212,199,554 189,740,108

Reconciliation of Net Loss to EBITDA: Net loss as reported $(146,619) $(166,094) $(266,521) $(336,173) Add back non-EBITDA items included in net loss: Interest income (5,078) (1,086) (9,102) (2,165) Interest expense 24,476 19,225 44,501 47,346 Provision for deferred income taxes 579 579 1,158 26,152 Depreciation & amortization 36,737 39,557 68,801 79,038

EBITDA $(89,905) $(107,819) $(161,163) $(185,802)

As of As of SELECTED BALANCE SHEET DATA 6/30/2005 12/31/2004 (Unaudited) Cash and cash equivalents $930,377 $717,867 Restricted investments 4,506 4,492 System under construction 163,801 329,355 Property and equipment in service, net 693,779 461,333 DARS license 141,252 141,227 Total assets 2,171,007 1,821,635 Deferred revenue 288,795 152,347 Total long-term debt 1,081,315 948,741 Total liabilities 1,785,707 1,485,472 Stockholders' equity 385,300 336,163

XM SATELLITE RADIO HOLDINGS INC.

Three-Month Periods ended

SELECTED OPERATING METRICS 6/30/2005 6/30/2004 EBITDA (in thousands) (1) $(89,905) $(107,819)

Subscriber Data: Net Subscriber Additions (2) 647,226 418,449

Aftermarket, OEM & Other Subscribers (3) 3,807,224 1,705,191 Subscribers in OEM Promotional Periods (4) 565,929 374,930

XM Activated Vehicles with Rental Car Companies (5) 44,337 20,231 Total Ending Subscribers (3) (4) (5) (6) 4,417,490 2,100,352

Subscription Revenue per Aftermarket, OEM & Other Subscriber $9.84 $9.26 Subscription Revenue per Subscriber in OEM Promotional Periods $5.63 $5.78 Subscription Revenue per XM Activated Vehicle with Rental Car Companies $9.74 $9.23

Revenue Data: Subscription Revenue per Subscriber (7) $9.35 $8.63 Net Ad Sales Revenue per Subscriber (8) $0.36 $0.25 Activation, Equipment and Other Revenue per Subscriber $0.63 $0.52

Total Revenue per Subscriber $10.34 $9.40

Expense Data: Subscriber Acquisition Costs (SAC) (9) $50 $57 Cost Per Gross Addition (CPGA) (10) $98 $101

(1) EBITDA is commonly referred to in our business as net loss before interest income, interest expense, income taxes, depreciation and amortization. Consistent with regulatory requirements, EBITDA includes Other Income (Expense). EBITDA is not a measure of financial performance under generally accepted accounting principles. We believe EBITDA is often a useful measure of a company's operating performance and is a significant basis used by our management to measure the operating performance of our business. Because we have funded and completed the build-out of our system through the raising and expenditure of large amounts of capital, our results of operations reflect significant charges for depreciation, amortization and interest expense. EBITDA, which excludes this information, provides helpful information about the operating performance of our business, apart from the expenses associated with our physical plant or capital structure. EBITDA is frequently used as one of the bases for comparing businesses in our industry, although our measure of EBITDA may not be comparable to similarly titled measures of other companies. EBITDA does not purport to represent operating loss or cash flow from operating activities, as those terms are defined under generally accepted accounting principles, and should not be considered as an alternative to those measurements as an indicator of our performance.

(2) Total net subscriber additions for the three months ended June 30, 2005, include 315,888 retail, 323,772 OEM, and 7,566 rental car net additions.

(3) Ending subscribers include 658,313 family plan subscriptions at a multi-unit rate of $6.99 per radio per month.

(4) OEM Promotional Subscribers are subscribers who have either a portion or all of their subscription fee paid for by an OEM for a fixed period following the initial purchase or lease of the vehicle. Currently, at the time of sale, vehicle owners generally receive a 3- month trial subscription. XM generally receives two months of the 3- month trial subscription from the vehicle manufacturer. The automated activation program provides activated XM radios on dealer lots for test drives. GM and Honda generally indicate the inclusion of 3 months free of XM service on the window sticker of XM-enabled vehicles. We measure the success of these programs based on the percentage that elect to continue to receive the XM service and convert to self-paying subscribers after the initial promotion period-we refer to this as the "conversion rate". The conversion rate for the quarter ended June 30, 2005 is 58% and reflects the auto activation program, with all XM-enabled vehicles activated for the promotional period.

(5) Rental car activity commenced in late June 2003. At June 30, 2005, there were 44,337 XM subscriptions in rental vehicles. For the initial Model Year 2003 XM-enabled rental vehicles, XM receives payments based on the use of the service. Customers are charged $2.99 per day per vehicle for use of the XM service, on which XM receives a revenue share. For subsequent Model Year 2004 and later vehicles, XM receives $10 per subscription per month.

(6) Subscribers are those who are receiving and have agreed to pay for our satellite audio service, either by credit card or by invoice, including those who are currently in promotional periods paid in part by vehicle manufacturers, as well as XM activated radios in vehicles for which we have a contractual right to receive payment for the use of our satellite audio service. Radios that are revenue generating are counted individually as subscribers. Promotional periods generally include the period of trial service plus 30 days for the receipt and processing of payments.

(7) Subscription Revenue includes monthly subscription revenues for our satellite audio service, net of any promotions or discounts.

(8) Net Ad Sales Revenue includes sales of advertisements and program sponsorships on the XM network net of agency commissions.

(9) SAC is a subset of total CPGA and includes radio manufacturer subsidies, certain sales, activation and installation commissions, and hardware-related promotions. These costs are reported in subsidies & distribution. SAC also includes the negative margin on equipment sales. These expenses are divided by the appropriate per unit gross additions, or units manufactured.

(10) CPGA includes all costs in SAC, as well as advertising and marketing expenses, divided by gross additions for the period.

Photo: NewsCom: http://www.newscom.com/cgi-bin/prnh/20000724/XMSATLOGO AP Archive: http://photoarchive.ap.org/ PRN Photo Desk photodesk@prnewswire.com Source: XM Satellite Radio Holdings Inc.

CONTACT: investors, Gary Tiedemann, +1-202-380-4396, gary.tiedemann@xmradio.com, or media, Chance Patterson, +1-202-380-4318, chance.patterson@xmradio.com

Web site: http://www.xmradio.com/

------- Profile: Ent