SIRIUS XM Radio Reports Fourth Quarter and Full Year 2008 Results

SIRIUS XM Radio Reports Fourth Quarter and Full Year 2008 Results

- 2008 Pro Forma Revenue of $2.44 Billion, Up 18% Over 2007

- Total Subscribers of Approximately 19 Million, Up 10% Over 2007

- Company Achieves Positive Pro Forma Adjusted Income From Operations in Fourth Quarter 2008

- Liberty Media Investment Completed

- Investor Conference Call Scheduled for Thursday, March 12, 8:00 AM ET

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

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

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

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

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

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

INVESTOR CONFERENCE CALL

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

   A replay of the call will be available on www.sirius.com.    PRO FORMA RESULTS OF OPERATIONS   

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

FOURTH QUARTER 2008 VERSUS FOURTH QUARTER 2007

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

                       SIRIUS XM RADIO INC. AND SUBSIDIARIES          SUBSCRIBER DATA, METRICS AND OTHER NON-GAAP FINANCIAL MEASURES                    (Dollars in thousands, unless otherwise stated)                                   (Unaudited)    Subscriber  Data:                           Pro Forma                     Pro Forma                       Three months ended           Twelve months ended                          December 31,                   December 31,                     2008            2007            2008            2007    Beginning    subscribers  18,920,911      16,234,070      17,348,622      13,653,107   Gross    subscriber    additions     1,713,210       2,336,640       7,710,306       8,077,674   Deactivated    subscribers  (1,630,265)     (1,222,088)     (6,055,072)     (4,382,159)   Net additions     82,945       1,114,552       1,655,234       3,695,515   Ending    subscribers  19,003,856      17,348,622      19,003,856      17,348,622     Retail        8,905,087       9,238,715       8,905,087       9,238,715    OEM           9,995,953       8,033,268       9,995,953       8,033,268    Rental          102,816          76,639         102,816          76,639   Ending    subscribers  19,003,856      17,348,622      19,003,856      17,348,622     Retail         (131,333)        314,908        (333,628)        791,444    OEM             218,249         791,356       1,962,685       2,860,722    Rental           (3,971)          8,288          26,177          43,349   Net additions     82,945       1,114,552       1,655,234       3,695,515                               Pro Forma                       Pro Forma                       Three months ended             Twelve months ended                           December 31,                    December 31,                       2008           2007             2008           2007    Average self-pay    monthly    churn (1)(7)        1.8%            1.7%            1.8%            1.7%   Conversion    rate (2)(7)        44.2%           51.4%           47.5%           50.9%   ARPU (3)(7)       $10.60          $10.42          $10.51          $10.61   SAC, as adjusted,    per gross    subscriber    addition    (4)(7)              $70             $83             $74             $86   Customer service    and billing    expenses, as    adjusted,    per average    subscriber    (5)(7)            $1.18           $1.30           $1.11           $1.18   Total revenue   $644,108        $557,515      $2,436,740      $2,058,608   Free cash    flow (6)(7)     $25,877          $5,405       $(551,771)      $(504,869)   Adjusted income    (loss) from    Operations (8)  $31,797       $(224,143)      $(136,298)      $(565,452)   Net loss       $(248,468)      $(405,041)      $(902,335)    $(1,247,633)                          SIRIUS XM RADIO INC. AND SUBSIDIARIES                    PRO FORMA CONSOLIDATED RESULTS OF OPERATIONS                                     (Unaudited)                                 Pro Forma                 Pro Forma                            Three months ended        Twelve months ended                                December 31,             December 31,   (in thousands, except    per share data)            2008       2007        2008          2007     Total revenue            $644,108   $557,515  $2,436,740    $2,058,608    Operating expenses:   Satellite and    transmission              22,851     23,697      99,185       101,721   Programming and content   105,215    109,076     446,638       401,461   Revenue share and    royalties                122,711    163,541     477,962       403,059   Customer service and    billing                   67,036     65,006     244,195       217,402   Cost of equipment          18,084     37,334      66,104        97,820   Sales and marketing        81,712    123,711     342,296       413,084   Subscriber acquisition    costs                    132,731    180,767     577,126       654,775   General and    administrative            51,591     64,223     267,032       271,831   Engineering, design and    development               10,380     14,303      52,500        62,907   Depreciation and    amortization              49,519     75,045     245,571       293,976   Share-based payment    expense                   24,945     52,897     124,619       165,099   Restructuring and    related costs              2,977          -      10,434             -   Total operating    expenses                 689,752    909,600   2,953,662     3,083,135   Loss from operations      (45,644)  (352,085)   (516,922)   (1,024,527)   Other expense            (202,649)   (52,055)   (381,425)     (221,610)   Loss before income    taxes                   (248,293)  (404,140)   (898,347)   (1,246,137)   Income tax expense           (175)      (901)     (3,988)       (1,496)   Net loss                $(248,468) $(405,041)  $(902,335)  $(1,247,633)                        SIRIUS XM RADIO INC. AND SUBSIDIARIES                       CONSOLIDATED STATEMENTS OF OPERATIONS                                        Actual                  Actual                                Three months ended      Twelve months ended    (in thousands, except per        December 31,            December 31,    share data)                  2008         2007        2008        2007                              (Unaudited) (Unaudited)    Revenue:   Subscriber revenue, including    effects of rebates          $565,435   $227,658   $1,543,951   $854,933   Advertising revenue, net of    agency fees                   15,776      9,770       47,190     34,192   Equipment revenue              30,712     12,065       56,001     29,281   Other revenue                  10,260        323       16,850      3,660   Total revenue                 622,183    249,816    1,663,992    922,066   Operating expenses    (depreciation and    amortization   shown separately below) (1)   Cost of services:   Satellite and transmission     24,481      5,175       59,279     27,907   Programming and content        89,214     62,735      312,189    236,059   Revenue share and royalties   103,217     56,762      280,852    146,715   Customer service and billing   67,818     29,288      165,036     93,817   Cost of equipment              18,084     15,886       46,091     35,817   Sales and marketing            80,699     56,866      231,937    183,213   Subscriber acquisition costs  113,512    100,062      371,343    407,642   General and administrative     64,586     37,212      213,142    155,863   Engineering, design and    development                   12,404      7,946       40,496     41,343   Impairment of goodwill         15,331          -    4,766,190          -   Depreciation and amortization  82,958     27,638      203,752    106,780   Restructuring and related    costs                          2,977          -       10,434          -   Total operating expenses      675,281    399,570    6,700,741  1,435,156   Loss from operations          (53,098)  (149,754)  (5,036,749)  (513,090)   Other income (expense)   Interest and investment    income                           (90)     4,171        9,079     20,570   Interest expense, net of    amounts capitalized          (61,196)   (19,887)    (144,833)   (70,328)   Loss from redemption of debt  (98,203)         -      (98,203)         -   Loss on investments           (27,418)         -      (30,507)         -   Other (expense) income         (5,664)        17       (9,599)        31   Total other expense          (192,571)   (15,699)    (274,063)   (49,727)   Loss before income taxes     (245,669)  (165,453)  (5,310,812)  (562,817)   Income tax expense               (175)      (770)      (2,476)    (2,435)   Net loss                    $(245,844) $(166,223) $(5,313,288) $(565,252)   Net loss per common share    (basic and diluted)           $(0.08)    $(0.11)      $(2.45)    $(0.39)   Weighted average common    shares outstanding   (basic and diluted)         3,160,223  1,468,210    2,169,489  1,462,967     (1) Amounts related to share-based payment expense included in operating       expenses were as follows:     Satellite and transmission     $1,349       $364       $4,236     $2,198   Programming and content         4,672      2,786       12,148      9,643   Customer service and billing      783        165        1,920        708   Sales and marketing             2,165        539       13,541     15,607   Subscriber acquisition costs        -        156           14      2,843   General and administrative     12,995     10,261       49,354     44,317   Engineering, design and    development                    2,023        625        6,192      3,584    Total share-based payment    expense                      $23,987    $14,896      $87,405    $78,900                       SIRIUS XM RADIO INC. AND SUBSIDIARIES                      CONDENSED CONSOLIDATED BALANCE SHEETS                                                   Actual   (in thousands, except share and          As of December 31,    per share data)                         2008           2007                   ASSETS   Current assets:    Cash and cash equivalents             $380,446      $438,820    Accounts receivable, net of     allowance for doubtful     accounts of $6,746 and     $4,608, respectively                  102,024        44,068    Receivables from distributors           45,950        60,004    Inventory, net                          24,462        29,537    Prepaid expenses                        67,203        31,392    Related party current assets           114,177         2,161    Restricted investments                       -        35,000    Other current assets                    58,744        37,875    Total current assets                   793,006       678,857   Property and equipment, net           1,703,476       806,263   FCC licenses                          2,083,654        83,654   Restricted investments, net    of current portion                     141,250        18,000   Deferred financing fees, net             40,156        13,864   Intangible assets, net                  688,671             -   Goodwill                              1,834,856             -   Related party long-term    assets, net of current    portion                                124,607         3,237   Other long-term assets                   81,019        90,274    Total assets                        $7,490,695    $1,694,149     LIABILITIES AND STOCKHOLDERS' EQUITY                 (DEFICIT)   Current liabilities:    Accounts payable and accrued     expenses                             $877,594      $464,943    Accrued interest                        76,463        24,772    Deferred revenue                       985,180       548,330    Current maturities of long-term debt   399,726        35,801    Related party current liabilities       68,373         1,148    Total current liabilities            2,407,336     1,074,994   Long-term debt, net of    current portion                      2,851,740     1,278,617   Deferred revenue, net of    current portion                        247,889       110,525   Deferred credit on executory    contracts                            1,037,190             -   Deferred tax liability                  894,453        12,771   Other long-term liabilities              43,550         9,979    Total liabilities                    7,482,158     2,486,886    Commitments and  contingencies                -             -   Stockholders' equity (deficit):    Series A convertible     preferred stock, par value     $0.001 (liquidation     preference of $51,370 and $0 at     December 31, 2008 and 2007,     respectively); 50,000,000     authorized at December 31,     2008 and 2007, 24,808,959 and     zero shares issued and outstanding     at December 31, 2008 and 2007,     respectively                               25             -    Common stock, par value     $0.001; 8,000,000,000 and     2,500,000,000 shares     authorized at December 31,     2008 and 2007, respectively;     3,651,765,837 and 1,471,143,570     shares issued and     outstanding at December 31,     2008 and 2007, respectively             3,652         1,471    Accumulated other comprehensive loss,     net of tax                             (7,871)            -    Additional paid-in capital           9,724,991     3,604,764    Accumulated deficit                 (9,712,260)   (4,398,972)    Total stockholders' equity     (deficit)                               8,537      (792,737)    Total liabilities and     stockholders' equity     (deficit)                          $7,490,695    $1,694,149                       SIRIUS XM RADIO INC. AND SUBSIDIARIES                  CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                                                          Actual                                           For the Years Ended December 31,                                               2008              2007   (in thousands)    Cash flows from operating    activities:   Net loss                               $(5,313,288)        $(565,252)   Adjustments to reconcile net    loss to net cash used in    operating activities:   Depreciation and amortization              203,752           106,780   Impairment of goodwill                   4,766,190                 -   Non-cash interest expense, net    of amortization of premium                 (6,311)            4,269   Provision for doubtful accounts             21,589             9,002   Non-cash loss from redemption of    debt                                       98,203                 -   Amortization of deferred income    related to equity method    investment                                 (1,156)                -   Loss on disposal of assets                   4,879              (428)   Loss on investments, net                    28,999                 -   Share-based payment expense                 87,405            78,900   Deferred income taxes                        2,476             2,435   Other non-cash purchase price    adjustments                               (68,330)                -   Other                                        1,643                 -   Changes in operating assets and    liabilities:   Accounts receivable                        (32,121)          (28,881)   Inventory                                    8,291             4,965   Receivables from distributors               14,401           (13,179)   Related party assets                       (22,249)                -   Prepaid expenses and other    current assets                            (19,953)           11,459   Other long-term assets                      (5,490)           12,109   Accounts payable and accrued    expenses                                  (65,481)           66,169   Accrued interest                            23,081            (8,920)   Deferred revenue                            55,778           169,905   Related party liabilities                   34,646                 -   Other long-term liabilities                 30,249             1,901   Net cash used in operating    activities                               (152,797)         (148,766)     Cash flows from investing activities:   Additions to property and equipment       (130,551)          (65,264)   Sales of property and equipment                105               641   Purchases of restricted and    other investments                          (3,000)             (310)   Acquisition of acquired entity    cash                                      819,521                 -   Merger related costs                       (23,519)          (29,444)   Purchase of available-for-sale    securities                                      -                 -   Sale of restricted and other    investments                                65,869            40,191   Net cash provided by (used in)    investing activities                      728,425           (54,186)     Cash flows from financing    activities:   Proceeds from exercise of    warrants and stock options                    471             4,097   Long term borrowings, net of    related costs                             531,743           244,879   Payment of premiums on    redemption of debt                        (18,693)                -   Payments to minority interest    holder                                     (1,479)                -   Repayment of long term    borrowings                             (1,146,044)             (625)   Net cash (used in) provided by    financing activities                     (634,002)          248,351   Net (decrease) increase in cash    and cash equivalents                      (58,374)           45,399   Cash and cash equivalents at    beginning of period                       438,820           393,421   Cash and cash equivalents at end    of period                                $380,446          $438,820     FOOTNOTES TO PRESS RELEASE AND TABLES FOR NON-GAAP FINANCIAL MEASURES   

This press release, including the selected financial information above, includes the following non-GAAP financial measures: average monthly churn; SAC per gross subscriber addition; customer service and billing expenses per average subscriber; free cash flow; average monthly revenue per subscriber, or ARPU; adjusted income (loss) from operations; adjusted net loss; and adjusted net loss per share. The definitions and usefulness of such non-GAAP financial measures are as follows (dollars in thousands, unless otherwise stated):

   (1) Average self-pay monthly churn represents the average of self pay       deactivations by the period divided by the average self pay subscriber       balance for the period.    (2) We measure the percentage of subscribers that receive the service and       convert to self-paying after the initial promotion period. We refer       to this as the "conversion rate." At the time of sale, vehicle owners       generally receive between three and twelve month prepaid trial       subscriptions and we receive a subscription fee from the OEM.       Promotional periods generally include the period of trial service       plus 30 days to handle the receipt and processing of payments. We       measure conversion rate three months after the period in which the       trial service ends. Based on our experience it may take up to 90       days after the trial service ends for subscribers to respond to our       marketing communications and become self-paying subscribers.    (3) ARPU is derived from total earned subscriber revenue and net       advertising revenue divided by the daily weighted average number of       subscribers for the period. ARPU is calculated as follows (in       thousands, except for per subscriber amounts):                                Unaudited Pro Forma       Unaudited Pro Forma                              Three months ended        Twelve months ended                                 December 31,               December 31,                               2008          2007       2008         2007    Subscriber revenue        $585,534      $499,109  $2,247,334  $1,879,766   Net advertising    revenue                    15,776        20,571      69,933      73,340       Total subscriber and        net advertising        revenue              $601,310      $519,680  $2,317,267  $1,953,106    Daily weighted    average number of    subscribers            18,910,689    16,629,079  18,373,274  15,342,041   ARPU                        $10.60        $10.42      $10.51      $10.61     (4) SAC, as adjusted, per gross subscriber addition is derived from       subscriber acquisition costs and margins from the direct sale of       radios and accessories, excluding stock-based compensation, divided       by the number of gross subscriber additions for the period. SAC, as       adjusted, per gross subscriber addition is calculated as follows (in       thousands, except for per subscriber amounts):                                  Unaudited Pro Forma      Unaudited Pro Forma                               Three months ended      Twelve months ended                                  December 31,            December 31,                               2008           2007       2008       2007    Subscriber acquisition    cost                    $132,731       $190,090   $577,140   $666,785   Less: stock-based    compensation granted    to third parties and    employees                      -         (9,323)       (14)   (12,010)   Add: margin from direct    sales of radios    and accessories          (12,628)        12,201     (3,294)    40,206   SAC, as adjusted         $120,103       $192,968   $573,832   $694,981    Gross subscriber    additions              1,713,210      2,336,640  7,710,306  8,077,674   SAC, as adjusted, per    gross subscriber    addition                     $70            $83        $74        $86     (5) Customer service and billing expenses, as adjusted, per average       subscriber is derived from total customer service and billing       expenses, excluding stock-based compensation, divided by the daily       weighted average number of subscribers for the period. Customer       service and billing expenses, as adjusted, per average subscriber is       calculated as follows (in thousands, except for per subscriber       amounts):                               Unaudited Pro Forma        Unaudited Pro Forma                              Three months ended        Twelve months ended                                 December 31,               December 31,                                2008         2007        2008        2007    Customer service and    billing expenses          $67,906      $65,991    $248,176    $220,593   Less: stock-based    compensation                 (870)        (985)     (3,981)     (3,191)   Customer service and    billing expenses, as    adjusted                  $67,036      $65,006    $244,195    $217,402    Daily weighted    average number of    subscribers            18,910,689   16,629,079  18,373,274  15,342,041   Customer service and    billing expenses, as    adjusted, per average    subscriber                  $1.18        $1.30       $1.11       $1.18     (6) Free cash flow is calculated as follows (in thousands):                            Unaudited Pro Forma        Unaudited Pro Forma                           Three months ended        Twelve months ended                              December 31,              December 31,                            2008           2007       2008         2007    Net cash used in    operating activities   $64,195      $30,957  $(403,883)   $(303,496)   Additions to property    and equipment          (27,846)     (18,954)  (161,394)    (198,602)   Merger related costs    (10,472)      (6,680)   (23,519)     (29,444)   Restricted and other    investment activity          -           82     37,025       26,673   Free cash flow          $25,877       $5,405  $(551,771)   $(504,869)     (7) Average monthly self-pay churn; conversion rate; ARPU; SAC, as       adjusted, per gross subscriber addition; customer service and billing       expenses, as adjusted, per average subscriber; and free cash flow are       not measures of financial performance under U.S. generally accepted       accounting principles ("GAAP"). We believe these non-GAAP financial       measures provide meaningful supplemental information regarding our       operating performance and are used by us for budgetary and planning       purposes; when publicly providing our business outlook; as a means to       evaluate period-to-period comparisons; and to compare our performance       to that of our competitors. We also believe that investors also use       our current and projected metrics to monitor the performance of our       business and to make investment decisions.        We believe the exclusion of stock-based compensation expense in our       calculations of SAC, as adjusted, per gross subscriber addition and       customer service and billing expenses, as adjusted, per average       subscriber is useful given the significant variation in expense that       can result from changes in the fair market value of our common stock,       the effect of which is unrelated to the operational conditions that       give rise to variations in the components of our subscriber       acquisition costs and customer service and billing expenses.       Specifically, the exclusion of stock-based compensation expense in       our calculation of SAC, as adjusted, per gross subscriber addition is       critical in being able to understand the economic impact of the       direct costs incurred to acquire a subscriber and the effect over       time as economies of scale are reached.        These non-GAAP financial measures are used in addition to and in       conjunction with results presented in accordance with GAAP. These       non-GAAP financial measures may be susceptible to varying       calculations; may not be comparable to other similarly titled       measures of other companies; and should not be considered in       isolation, as a substitute for, or superior to measures of financial       performance prepared in accordance with GAAP.    (8) We refer to net income (loss) before taxes; other income (expense)       - including interest and investment income, interest expense,       depreciation and amortization, restructuring and related costs and       impairment of goodwill; and stock-based compensation expense as       adjusted income (loss) from operations. Adjusted income (loss) from       operations is not a measure of financial performance under GAAP. We       believe adjusted income (loss) from operations is a useful measure of       our operating performance. We use adjusted income (loss) from       operations for budgetary and planning purposes; to assess the relative       profitability and on-going performance of our consolidated operations;       to compare our performance from period-to-period; and to compare our       performance to that of our competitors. We also believe adjusted       income (loss) from operations is useful to investors to compare our       operating performance to the performance of other communications,       entertainment and media companies. We believe that investors use       current and projected adjusted income (loss) from operations to       estimate our current or prospective enterprise value and to make       investment decisions.        Because we fund and build-out our satellite radio system through the       periodic raising and expenditure of large amounts of capital, our       results of operations reflect significant charges for interest and       depreciation expense. We believe adjusted income (loss) from       operations provides useful information about the operating performance       of our business apart from the costs associated with our capital       structure and physical plant. The exclusion of interest and       depreciation and amortization expense is useful given fluctuations in       interest rates and significant variation in depreciation and       amortization expense that can result from the amount and timing of       capital expenditures and potential variations in estimated useful       lives, all of which can vary widely across different industries or       among companies within the same industry. We believe the exclusion of       taxes is appropriate for comparability purposes as the tax positions       of companies can vary because of their differing abilities to take       advantage of tax benefits and because of the tax policies of the       various jurisdictions in which they operate. We believe the exclusion       of restructuring and related costs and impairment of goodwill is       useful given the one-time nature of these transactions. We also       believe the exclusion of stock-based compensation expense is useful       given the significant variation in expense that can result from       changes in the fair market value of our common stock. To compensate       for the exclusion of taxes, other income (expense), depreciation and       stock-based compensation expense, we separately measure and budget for       these items.        There are material limitations associated with the use of adjusted       income (loss) from operations in evaluating our company compared with       net loss, which reflects overall financial performance, including the       effects of taxes, other income (expense), depreciation and       amortization, restructuring and related costs, impairment of goodwill       and stock-based compensation expense. We use adjusted income (loss)       from operations to supplement GAAP results to provide a more complete       understanding of the factors and trends affecting the business than       GAAP results alone. Investors that wish to compare and evaluate our       operating results after giving effect for these costs, should refer to       net loss as disclosed in our unaudited consolidated statements of       operations. Since adjusted income (loss) from operations is a non-GAAP       financial measure, our calculation of adjusted income (loss) from       operations may be susceptible to varying calculations; may not be       comparable to other similarly titled measures of other companies; and       should not be considered in isolation, as a substitute for, or       superior to measures of financial performance prepared in accordance       with GAAP.        The reconciliation of the pro forma unadjusted Net loss to the pro       forma Adjusted income (loss) from operations is calculated as follows:                             Unaudited Pro Forma        Unaudited Pro Forma                           Three months ended         Twelve months ended                              December 31,               December 31,   (in thousands)         2008           2007        2008            2007    Reconciliation of    Net loss to    Adjusted loss from    operations:     Net loss as      reported         $(248,468)    $(405,041)   $(902,335)   $(1,247,633)   Add back Net loss    items excluded    from Adjusted loss    from operations:     Interest and      investment income       90        (6,978)     (12,092)       (34,654)     Interest expense,      net of amounts      capitalized         71,274        48,703      235,655        186,933     Income tax expense      175           901        3,988          1,496     Loss from      redemption of debt  98,203           728       98,203          3,693     Loss on investments  27,418         3,768       43,517         56,156     Other expense      (income)             5,664         5,834       16,142          9,482       Loss from        operations       (45,644)     (352,085)    (516,922)    (1,024,527)     Restructuring and      related costs        2,977             -       10,434              -     Depreciation and      amortization        49,519        75,045      245,571        293,976     Stock-based      compensation        24,945        52,897      124,619        165,099   Adjusted income    (loss) from    operations           $31,797     $(224,143)   $(136,298)     $(565,452)   

There are material limitations associated with the use of a pro forma unadjusted results of operations in evaluating our company compared with our GAAP Results of operations, which reflects overall financial performance. We use pro forma unadjusted results of operations to supplement GAAP results to provide a more complete understanding of the factors and trends affecting the business than GAAP results alone. Investors that wish to compare and evaluate our operating results after giving effect for these costs, should refer to Results of operations as disclosed in our unaudited consolidated statements of operations. Since pro forma unadjusted results of operations is a non-GAAP financial measure, our calculations may not be comparable to other similarly titled measures of other companies; and should not be considered in isolation, as a substitute for, or superior to measures of financial performance prepared in accordance with GAAP.

About SIRIUS XM Radio

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

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

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

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

This communication contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about the benefits of the business combination transaction involving SIRIUS and XM, including potential synergies and cost savings and the timing thereof, future financial and operating results, the combined company's plans, objectives, expectations and intentions with respect to future operations, products and services; and other statements identified by words such as "anticipate," "believe," "plan," "estimate," "expect," "intend," "will," "should," "may," or words of similar meaning. Such forward-looking statements are based upon the current beliefs and expectations of SIRIUS' and XM's management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are difficult to predict and generally beyond the control of SIRIUS and XM. Actual results may differ materially from the results anticipated in these forward-looking statements.

The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statement: general business and economic conditions; the performance of financial markets and interest rates; the failure to realize synergies and cost-savings from the merger or delay in realization thereof; the businesses of SIRIUS and XM may not be combined successfully, or such combination may take longer, be more difficult, time-consuming or costly to accomplish than expected. Additional factors that could cause SIRIUS' and XM's results to differ materially from those described in the forward-looking statements can be found in SIRIUS' Annual Report on Form 10-K for the year ended December 31, 2008, which is filed with the Securities and Exchange Commission (the "SEC") and available at the SEC's Internet site (http://www.sec.gov/). The information set forth herein speaks only as of the date hereof, and SIRIUS and XM disclaim any intention or obligation to update any forward looking statements as a result of developments occurring after the date of this communication.

   E-SIRI    Contact Information for Investors and Financial Media:     Paul Blalock   SIRIUS XM Radio   212 584 5174   paul.blalock@siriusxm.com    Patrick Reilly   SIRIUS XM Radio   212 901 6646   patrick.reilly@siriusxm.com    Hooper Stevens   SIRIUS XM Radio   212 901 6718   hooper.stevens@siriusxm.com  

First Call Analyst:
FCMN Contact: sresendez@siriusradio.com

Photo: http://www.newscom.com/cgi-bin/prnh/20080819/NYTU044LOGO

Source: SIRIUS XM Radio

CONTACT: Paul Blalock, +1-212-584-5174, paul.blalock@siriusxm.com, or
Patrick Reilly, +1-212-901-6646, patrick.reilly@siriusxm.com, or Hooper
Stevens, +1-212-901-6718, hooper.stevens@siriusxm.com, all of SIRIUS XM Radio

Web Site: http://www.sirius.com/

---

Profile: International Entertainment