SIRIUS XM Radio Reports Full Year and Fourth Quarter 2009 Results

SIRIUS XM Radio Reports Full Year and Fourth Quarter 2009 Results

- 2009 Pro Forma Revenue of $2.53 Billion, Up 4% Over 2008 - Free Cash Flow of Over $185 Million, First Full Year of Positive Free Cash Flow - Pro Forma Adj. Income From Operations of $463 Million, a $599 Million Improvement Over 2008 - 2010 Guidance Updated

NEW YORK, Feb. 25 /PRNewswire-FirstCall/ -- SIRIUS XM Radio (NASDAQ:SIRI) today announced full year 2009 results, including pro forma 2009 revenue of $2.53 billion, up 4% over 2008 pro forma revenue of $2.44 billion, and pro forma adjusted income from operations of $463 million, versus ($136) million in 2008.

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

"2009 was a notable year of firsts for SIRIUS XM: The first full year of positive pro forma adjusted income from operations and the first full year of positive free cash flow in the company's history," said Mel Karmazin, the Chief Executive Officer of SIRIUS XM. "We demonstrated considerable operating momentum in the fourth quarter - the addition of over 250,000 subscribers, ARPU growth, revenue growth, improved SAC, and continued operating cost reductions. These gains position us to deliver on our 2010 guidance."

In the fourth quarter 2009, the Company's pro forma average revenue per subscriber (ARPU) grew to $10.92 from $10.65 in the fourth quarter of 2008. The average self-pay monthly customer churn rate was 2.0% in the fourth quarter of 2009, as compared with 1.8% in the fourth quarter of 2008.

Fourth quarter of 2009 pro forma revenue was $684 million, up 6% from fourth quarter 2008 pro forma revenue of $644 million. Subscriber acquisition costs (SAC) per gross subscriber addition was $64 in the fourth quarter of 2009, an improvement of 9% over the $70 in SAC per gross subscriber addition in the fourth quarter of 2008.

In the fourth quarter of 2009, SIRIUS XM achieved pro forma adjusted income from operations of $115 million as compared with $32 million in the fourth quarter of 2008. Free cash flow in the quarter of 2009 was $150 million compared to $26 million in the fourth quarter of 2008. The pro forma fourth quarter 2009 net loss was ($25) million as compared with ($248) million in the fourth quarter of 2008. On a GAAP basis, the fourth quarter 2009 net income was $14 million compared to a loss of ($246) million in the 2008 quarter.

"The $599 million improvement in full-year pro forma adjusted income from operations illustrates the strength of our business model and also demonstrates the economic benefit generated by the SIRIUS-XM merger in July 2008," said David Frear, the Company's Executive Vice President and Chief Financial Officer. "With over $380 million in cash, positive free cash flow and continued growth in adjusted income from operations, our financial condition has never been stronger," Frear added.

2010 OUTLOOK

Looking to 2010, the company expects full-year revenue of over $2.7 billion. Free cash flow is expected to remain positive in 2010.

"We expect to add over 500,000 net subscribers this year, exceeding the company's previous subscriber high of 19 million at the end of 2008. We also expect this year's adjusted income from operations to be up approximately 20% to $550 million," said Karmazin.

INVESTOR CONFERENCE CALL

SIRIUS XM plans to hold a conference call on Thursday, February 25, 2010 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 between SIRIUS and XM occurred on January 1, 2007 and excludes the effects of stock-based compensation and purchase accounting adjustments associated with the merger between SIRIUS and XM.

FOURTH QUARTER 2009 VERSUS FOURTH QUARTER 2008

For the fourth quarter of 2009, SIRIUS XM recognized total revenue of $684 million compared to $644 million for the fourth quarter 2008. This 6%, or $40 million, increase in revenue was driven by the U.S. Music Royalty Fee introduced in the third quarter of 2009, the sale of "Best of" programming, and rate increases to the company's multi-subscription and Internet packages.

Total ARPU for the three months ended December 31, 2009 was $10.92, compared to $10.65 for the three months ended December 31, 2008. The increase was driven mainly by the sale of "Best of" programming and increased rates on the company's multi-subscription and Internet packages, partially offset by a decline in net advertising revenue per average subscriber.

In the fourth quarter of 2009, the company maintained positive pro forma adjusted income from operations of $115 million compared to a pro forma adjusted income from operations of $32 million for the fourth quarter of 2008 (refer to the reconciliation table of net loss to adjusted income (loss) from operations). The improvement was driven by the increase in total revenue of $40 million and a $44 million, or 7%, decrease in expenses included in pro forma adjusted income from operations.

Satellite and transmission costs increased 10%, or $2 million, in the three months ended December 31, 2009 compared to the same period in 2008 due to non-cash repeater lease charges and an increase in in-orbit insurance expense, partially offset by reductions in repeater maintenance and personnel costs.

Programming and content costs decreased 12%, or $12 million, in the three months ended December 31, 2009 compared to the same period in 2008 due mainly to reductions in personnel and on-air talent costs as well as savings on certain content arrangements.

Revenue share and royalties increased 1%, or $2 million, in the three months ended December 31, 2009 compared to the same period in 2008, due mainly to the increase in the company's revenues and the statutory royalty rate for the performance of sound recordings offset in part by a reduction in the revenue share rate paid to an automaker.

Customer service and billing costs decreased 12%, or $8 million, in the three months ended December 31, 2009 compared to the same period in 2008 due primarily to reductions in personnel and customer call center expenses.

Cost of equipment decreased 33%, or $6 million, in the three months ended December 31, 2009 compared to the same period in 2008 as a result of a decrease in the company's direct to customer sales and lower inventory write-downs.

Sales and marketing costs decreased 2%, or $2 million, and decreased as a percentage of revenue to 12% from 13% in the three months ended December 31, 2009 compared to the same period in 2008. The decrease in Sales and marketing costs was due to reduced personnel costs and third party distribution support expenses.

Subscriber acquisition costs decreased 4%, or $5 million, and decreased as a percentage of revenue to 19% from 21% in the three months ended December 31, 2009 compared to the same period in 2008. SAC per gross addition declined by 9%, to $64, from $70 in the year ago period. This improvement in the 2009 quarter was driven by lower OEM subsidies, chipset costs and aftermarket acquisition costs, partially offset by higher aftermarket inventory related charges as compared to the three months ended December 31, 2008. Subscriber acquisition costs also decreased despite the 10% increase in gross additions during the three months ended December 31, 2009 compared to the three months ended December 31, 2008.

General and administrative costs decreased 24%, or $12 million, mainly due to the absence of certain legal and regulatory charges incurred in 2008 and lower personnel costs.

Engineering, design and development costs decreased 23%, or $2 million, in the three months ended December 31, 2009 compared to the same period in 2008 due to lower costs associated with development, tooling, and testing of radios as well as lower personnel costs.

Restructuring, impairments and related costs decreased 11% during the 2009 quarter due to fewer restructuring charges associated with the merger with XM.

Other expenses decreased 65%, or $132 million, in the three months ended December 31, 2009 compared to the same period in 2008. The reduction was largely the product of the decrease in loss on extinguishment of debt and credit facilities of $94 million, an increase in gain on investments of $29 million, and $7 million increase in other income (expense). The decrease in loss on the extinguishment of debt and credit facilities was driven mainly by the exchange of certain of the company's 2½% Convertible Notes due 2009 into shares of the company's common stock in December 2008. The increase in gain on investments was attributable to an impairment charge recorded in 2008 on XM's carrying value of its investments with no such impairment recorded in the fourth quarter of 2009 and payments received from Canadian Satellite Radio Inc. in excess of XM's carrying value of its investments.

YEAR ENDED DECEMBER 31, 2009 VERSUS YEAR ENDED DECEMBER 31, 2008

For the twelve months ended December 31, 2009, SIRIUS XM recognized total revenue of $2,527 million compared with $2,437 million for the twelve months ended December 31, 2008. This 4%, or $90 million, increase in revenue was primarily driven by the U.S. Music Royalty Fee introduced in the third quarter of 2009, the sale of "Best of" programming, and rate increases to the company's multi-subscription and Internet packages.

ARPU for the twelve months ended December 31, 2009 was $10.73, compared to $10.56 for the twelve months ended December 31, 2008. The increase was driven mainly by the sale of "Best of" programming, increased rates on the company's multi-subscription packages and revenues earned on its Internet packages, partially offset by a decline in net advertising revenue per average subscriber.

The company's pro forma adjusted income from operations increased $599 million to $463 million for the twelve months ended December 31, 2009 from a loss of ($136) million for the twelve months ended December 31, 2008 (refer to the reconciliation table of net loss to adjusted income (loss) from operations). This increase was driven by a 4%, or $90 million, increase in revenue and a 20%, or $509 million, decrease in expenses included in pro forma adjusted income (loss) from operations.

Satellite and transmission costs decreased 17%, or $17 million, in the twelve months ended December 31, 2009 compared to 2008 due to reductions in repeater maintenance costs, non-cash repeater charges, and personnel costs.

Programming and content costs decreased 17%, or $76 million, in the twelve months ended December 31, 2009 compared to 2008, due to a one-time payment recognized in 2008 to a programming provider upon completion of the merger with XM, reductions in personnel and on-air talent costs as well as savings on certain content arrangements.

Revenue share and royalties increased 2%, or $9 million, for the twelve months ended December 31, 2009 compared to 2008, due to the increase in the company's revenues and the statutory royalty rate for the performance of sound recordings offset in part by a reduction in the revenue share rate paid to an automaker.

Customer service and billing costs decreased 5%, or $12 million, for the twelve months ended December 31, 2009 compared to 2008 due to scale efficiencies.

Cost of equipment decreased 39%, or $26 million, in the twelve months ended December 31, 2009 compared to 2008 as a result of a decrease in the company's direct to customer sales, lower inventory write-downs and lower product and component sales.

Sales and marketing costs decreased 32%, or $110 million, and decreased as a percentage of revenue to 9% from 14% in the twelve months ended December 31, 2009 compared to 2008. The decrease was due to reduced advertising and cooperative marketing spend as well as reductions to personnel costs and third party distribution support expenses.

Subscriber acquisition costs decreased 30%, or $175 million, and decreased as a percentage of revenue to 16% from 24% in the twelve months ended December 31, 2009 compared to 2008. This decrease was driven by a 15% improvement in SAC, as adjusted, per gross addition due to fewer OEM installations relative to gross subscriber additions, decreased production of certain radios and lower aftermarket inventory reserves in the twelve months ended December 31, 2009 as compared to the twelve months ended December 31, 2008. Subscriber acquisition costs also decreased as a result of the 19% decline in gross additions during the twelve months ended December 31, 2009.

General and administrative costs decreased 32%, or $85 million, mainly due to the absence of certain legal and regulatory charges incurred in 2008 and lower personnel costs.

Engineering, design and development costs decreased 31%, or $16 million, in the twelve months ended December 31, 2009 compared to 2008, due to lower costs associated with development, tooling, and testing of radios as well as lower personnel costs.

Restructuring, impairments and related costs increased $22 million mainly due to a loss of $24 million on capitalized installment payments, offset partially by a decrease in personnel related restructuring costs.

Other expenses increased 53%, or $202 million, in the twelve months ended December 31, 2009 compared to 2008 driven mainly by the increase in loss on extinguishment of debt and credit facilities of $170 million, and an increase in interest expense of $89 million, offset by an increase of $45 million in gain on investments and an increase in other income of $19 million. The increase in loss on the extinguishment of debt and credit facilities was driven by the full repayment of SIRIUS' Credit Agreement with Liberty Media and XM's Amended and Restated Credit Agreement and its Second-Lien Credit Agreement. Interest expense increased due primarily to the issuance of XM's 13% Senior Notes due 2013 and the 7% Exchangeable Senior Subordinated Notes due 2014 in the fourth quarter of 2008. The increase in gain on investments was attributable to a higher impairment charge recorded in 2008 on XM's carrying value of its investments than recorded in 2009, payments received from Canadian Satellite Radio Inc. in excess of XM's carrying value of its investment, partially offset by the company's share of SIRIUS Canada's and XM Canada's net losses for the twelve months ended December 31, 2009 compared to 2008.

The following tables contain actual and pro forma subscriber and key operating metrics for the three and twelve months ended December 31, 2009 and 2008, respectively.

Unaudited
---------
For the Three Months For the Twelve Months
Ended December 31, Ended December 31,
------------------ ------------------
2009 2008 2009 2008
---- ---- ---- ----
(Actual) (Actual) (Actual) (Pro Forma)

Beginning subscribers 18,515,730 18,920,911 19,003,856 17,348,622
Gross subscriber
additions 1,882,950 1,713,210 6,208,482 7,710,306
Deactivated subscribers (1,625,922) (1,630,265) (6,439,580) (6,055,072)
---------- ---------- ---------- ----------
Net additions 257,028 82,945 (231,098) 1,655,234
---------- ---------- ---------- ----------
Ending subscribers 18,772,758 19,003,856 18,772,758 19,003,856
========== ========== ========== ==========

Retail 7,725,750 8,905,087 7,725,750 8,905,087
OEM 10,930,952 9,995,953 10,930,952 9,995,953
Rental 116,056 102,816 116,056 102,816
---------- ---------- ---------- ----------
Ending subscribers 18,772,758 19,003,856 18,772,758 19,003,856
========== ========== ========== ==========

Retail (200,154) (131,333) (1,179,452) (333,628)
OEM 442,422 218,249 935,114 1,962,685
Rental 14,760 (3,971) 13,240 26,177
---------- ---------- ---------- ----------
Net additions 257,028 82,945 (231,098) 1,655,234
========== ========== ========== ==========

Self-pay 15,703,932 15,549,657 15,703,932 15,549,657
Paid promotional 3,068,826 3,454,199 3,068,826 3,454,199
---------- ---------- ---------- ----------
Ending subscribers 18,772,758 19,003,856 18,772,758 19,003,856
========== ========== ========== ==========

Self-pay 247,182 359,069 154,275 1,676,311
Paid promotional 9,846 (276,124) (385,373) (21,077)
---------- ---------- ---------- ----------
Net additions 257,028 82,945 (231,098) 1,655,234
========== ========== ========== ==========

Daily weighted average
number of subscribers 18,576,151 18,910,689 18,529,696 18,373,274
========== ========== ========== ==========

Unaudited Pro Forma
-------------------
For the Three Months For the Twelve Months
Ended December 31, Ended December 31,
------------------ ------------------
(in thousands, except
for per subscriber
amounts) 2009 2008 2009 2008
---- ---- ---- ----

Average self-pay
monthly churn (1)(7) 2.0% 1.8% 2.0% 1.8%
Conversion rate (2)(7) 46.4% 44.2% 45.4% 47.5%
ARPU (3)(7) $10.92 $10.65 $10.73 $10.56
SAC, as adjusted, per
gross subscriber
addition (4)(7) $64 $70 $63 $74
Customer service and
billing expenses, as
adjusted, per average
subscriber (5)(7) $1.06 $1.18 $1.05 $1.11
Total revenue $683,779 $644,108 $2,526,703 $2,436,740
Free cash flow (6)(7) $149,547 $25,877 $185,319 $(551,771)
Adjusted income (loss)
from operations (8) $115,339 $31,797 $462,539 $(136,298)
Net loss $(25,243) $(248,468) $(441,333) $(902,335)

SIRIUS XM RADIO INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

Pro Forma
---------
For the Three Months For the Twelve Months
Ended December 31, Ended December 31,
------------------ ------------------
(in thousands) 2009 2008 2009 2008
---- ---- ---- ----

Revenue:
Subscriber revenue,
including effects of
rebates $593,841 $588,622 $2,334,317 $2,258,322
Advertising revenue, net
of agency fees 14,467 15,776 51,754 69,933
Equipment revenue 19,008 30,712 50,352 69,398
Other revenue 56,463 8,998 90,280 39,087
-------- --------- --------- ---------
Total revenue 683,779 644,108 2,526,703 2,436,740

Operating expenses:
Satellite and
transmission 25,094 22,851 82,170 99,185
Programming and content 92,857 105,215 370,470 446,638
Revenue share and
royalties 124,527 122,711 486,990 477,962
Customer service and
billing 58,887 67,036 232,405 244,195
Cost of equipment 12,200 18,084 40,188 66,104
Sales and marketing 80,161 81,712 232,199 342,296
Subscriber acquisition
costs 127,588 132,731 401,670 577,126
General and
administrative 39,108 51,591 181,920 267,032
Engineering, design and
development 8,018 10,380 36,152 52,500
Depreciation and
amortization 57,549 49,519 203,145 245,571
Restructuring, impairments
and related costs 2,640 2,977 32,807 10,434
Share-based payment
expense 7,480 24,945 78,782 124,619
-------- --------- --------- ---------
Total operating expenses 636,109 689,752 2,378,898 2,953,662
-------- --------- --------- ---------
Income (loss) from operations 47,670 (45,644) 147,805 (516,922)
Other expense (70,276) (202,649) (583,157) (381,425)
-------- --------- --------- ---------
Loss before income taxes (22,606) (248,293) (435,352) (898,347)
Income tax expense (2,637) (175) (5,981) (3,988)

-------- --------- --------- ---------
Net loss $(25,243) $(248,468) $(441,333) $(902,335)
======== ========= ========= =========

SIRIUS XM RADIO INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS

Actual
------
For the Three Months For the Twelve Months
Ended December 31, Ended December 31,
------------------ ------------------
(in thousands, except
per share data) 2009 2008 2009 2008
---- ---- ---- ----
(Unaudited) (Unaudited) (Unaudited)

Revenue:
Subscriber revenue,
including effects
of rebates $588,048 $568,523 $2,287,503 $1,548,919
Advertising revenue,
net of agency fees 14,467 15,776 51,754 47,190
Equipment revenue 19,008 30,712 50,352 56,001
Other revenue 54,650 7,172 83,029 11,882
--------- --------- --------- ----------
Total revenue 676,173 622,183 2,472,638 1,663,992
Operating expenses
(depreciation and
amortization shown
separately below) (1):
Cost of services:
Satellite and
transmission 24,597 24,481 84,033 59,279
Programming
and content 77,297 89,214 308,121 312,189
Revenue share and
royalties 100,355 103,217 397,210 280,852
Customer service
and billing 58,887 67,818 234,456 165,036
Cost of equipment 12,200 18,084 40,188 46,091
Sales and marketing 76,308 80,699 228,956 231,937
Subscriber
acquisition costs 109,733 113,512 340,506 371,343
General and
administrative 44,601 64,586 227,554 213,142
Engineering, design
and development 8,056 12,404 41,031 40,496
Impairment of goodwill - 15,331 - 4,766,190
Depreciation and
amortization 77,826 82,958 309,450 203,752
Restructuring,
impairments and
related costs 2,640 2,977 32,807 10,434
--------- --------- --------- ----------
Total operating
expenses 592,500 675,281 2,244,312 6,700,741
--------- --------- --------- ----------
Income (loss)
from operations 83,673 (53,098) 228,326 (5,036,749)
Other income (expense):
Interest and
investment income 1,043 (90) 3,645 9,079
Interest expense, net
of amounts
capitalized (66,358) (61,196) (306,420) (144,833)
Loss on extinguishment
of debt and credit
facilities, net (3,879) (98,203) (267,646) (98,203)
Gain (loss) on
investments 1,474 (27,418) 1,931 (30,507)
Other income (expense) 851 (5,664) 3,355 (9,599)
--------- --------- --------- ----------
Total other expense (66,869) (192,571) (565,135) (274,063)
--------- --------- --------- ----------
Income (loss) before
income taxes 16,804 (245,669) (336,809) (5,310,812)
Income tax expense (2,637) (175) (5,981) (2,476)
--------- --------- --------- ----------
Net income (loss) 14,167 (245,844) (342,790) (5,313,288)
Preferred stock
beneficial conversion
feature - - (186,188) -
--------- --------- --------- ----------
Net income (loss)
attributable
to common
stockholders
$14,167 $(245,844) $(528,978) $(5,313,288)
========= ========= ========= =========
Net loss per common
share (basic and
diluted) $- $(0.08) $(0.15) $(2.45)
========= ========= ========= =========
Weighted average common
shares outstanding
(basic and diluted) 3,642,459 3,160,223 3,585,864 2,169,489
========= ========= ========= =========


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

Satellite and transmission $(276) $1,349 $2,745 $4,236
Programming and content 1,646 4,672 9,064 12,148
Customer service and
billing - 783 2,051 1,920
Sales and marketing (474) 2,165 9,608 13,541
Subscriber acquisition
costs - - - 14
General and
administrative 5,493 12,995 45,634 49,354
Engineering, design
and development 38 2,023 4,879 6,192

------ ------- ------- -------
Total share-based
payment expense $6,427 $23,987 $73,981 $87,405
====== ======= ======= =======

SIRIUS XM RADIO INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

As of December 31,
------------------
(in thousands, except share and per share data) 2009 2008
---- ----
ASSETS (Unaudited)
Current assets:
Cash and cash equivalents $383,489 $380,446
Accounts receivable, net 113,580 102,024
Receivables from distributors 48,738 45,950
Inventory, net 16,193 24,462
Prepaid expenses 100,273 67,203
Related party current assets 106,247 110,427
Deferred tax asset 72,640 31,270
Other current assets 18,620 27,474
---------- ----------
Total current assets 859,780 789,256
Property and equipment, net 1,711,003 1,703,476
FCC licenses 2,083,654 2,083,654
Restricted investments 3,400 141,250
Deferred financing fees, net 8,902 9,197
Intangible assets, net 611,461 688,671
Goodwill 1,834,856 1,834,856
Related party long-term assets 110,594 128,357
Other long-term assets 39,878 81,019
---------- ----------
Total assets $7,263,528 $7,459,736
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $543,686 $625,264
Accrued interest 74,566 76,463
Current portion of deferred revenue 1,086,205 1,002,736
Current portion of deferred credit on
executory contracts 252,831 234,774
Current maturities of long-term debt 13,882 399,726
Related party current liabilities 105,471 68,373
---------- ----------
Total current liabilities 2,076,641 2,407,336
Deferred revenue 283,942 247,889
Deferred credit on executory contracts 784,078 1,037,190
Long-term debt 2,799,127 2,820,781
Long-term related party debt 263,566 -
Deferred tax liability 940,182 894,453
Related party long-term liabilities 17,508 -
Other long-term liabilities 61,052 43,550
---------- ----------
Total liabilities 7,226,096 7,451,199
---------- ----------

Commitments and contingencies
Stockholders' equity:
Preferred stock, par value $0.001; 50,000,000
authorized at December 31, 2009 and 2008:
Series A convertible preferred stock
(liquidation preference of $51,370 at
December 31, 2009 and 2008); 24,808,959
shares issued and outstanding at December 31,
2009 and 2008 25 25
Convertible perpetual preferred stock,
series B (liquidation preference of $13 and
$0 at December 31, 2009 and 2008, respectively);
12,500,000 and zero shares issued and
outstanding at December 31, 2009 and 2008,
respectively 13 -
Convertible preferred stock, series C junior; no
shares issued and outstanding at December 31,
2009 and 2008 - -
Common stock, par value $0.001; 9,000,000,000 and
8,000,000,000 shares authorized at December 31,
2009 and 2008, respectively; 3,882,659,087 and
3,651,765,837 shares issued and outstanding at
December 31, 2009 and 2008, respectively 3,882 3,652
Accumulated other comprehensive loss, net of tax (6,581) (7,871)
Additional paid-in capital 10,281,331 9,724,991
Accumulated deficit (10,241,238) (9,712,260)
----------- ----------
Total stockholders' equity 37,432 8,537
----------- ----------
Total liabilities and stockholders'
equity $7,263,528 $7,459,736
=========== ==========

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

For the Years Ended
December 31,
-------------------
(in thousands) 2009 2008
---- ----
(Unaudited)
Cash flows from operating activities:
Net loss $(342,790) $(5,313,288)
Adjustments to reconcile net loss to net
cash provided by (used in) operating
activities:
Depreciation and amortization 309,450 203,752
Impairment of goodwill - 4,766,190
Non-cash interest expense, net of
amortization of premium 33,818 (6,311)
Provision for doubtful accounts 30,602 21,589
Amortization of deferred income
related to equity method investment (2,776) (1,156)
Loss on extinguishment of debt and
credit facilities, net 267,646 98,203
Restructuring, impairments and related
costs 26,964 -
Loss (gain) on disposal of assets - 4,879
Loss on investments 13,664 28,999
Share-based payment expense 73,981 87,405
Deferred income taxes 5,981 2,476
Other non-cash purchase price
adjustments (202,054) (68,330)
Other - 1,643
Changes in operating assets and liabilities:
Accounts receivable (42,158) (32,121)
Inventory 8,269 8,291
Receivables from distributors (2,788) 14,401
Related party assets 15,305 (22,249)
Prepaid expenses and other current
assets 10,027 (19,953)
Other long-term assets 86,674 (5,490)
Accounts payable and accrued
expenses (46,645) (83,037)
Accrued interest 2,429 23,081
Deferred revenue 89,144 73,334
Related party liabilities 54,606 34,646
Other long-term liabilities 44,481 30,249
-------- --------
Net cash provided by (used
in) operating activities 433,830 (152,797)
-------- --------


Cash flows from investing activities:
Additions to property and equipment (248,511) (130,551)
Sales of property and equipment - 105
Purchases of restricted and other investments - (3,000)
Acquisition of acquired entity cash - 819,521
Merger related costs - (23,519)
Sale of restricted and other investments - 65,869
-------- --------
Net cash (used in) provided
by investing activities (248,511) 728,425
-------- --------


Cash flows from financing activities:
Proceeds from exercise of warrants and
stock options - 471
Preferred stock issuance costs, net of costs (3,712) -
Long-term borrowings, net of costs 582,612 531,743
Related party long-term borrowings, net of
costs 362,593 -
Payment of premiums on redemption of debt (17,075) (18,693)
Payments to noncontrolling interest - (61,880)
Repayment of long-term borrowings (755,447) (1,085,643)
Repayment of related party long-term
borrowings (351,247) -
-------- --------
Net cash (used in) provided
by financing activities (182,276) (634,002)
-------- --------
Net increase (decrease) in cash and cash
equivalents 3,043 (58,374)
Cash and cash equivalents at beginning of
period 380,446 438,820
-------- --------
Cash and cash equivalents at end of period $383,489 $380,446
======== ========

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

(1) Average self-pay monthly churn represents the monthly average of
self-pay deactivations by the quarter divided by the average self-pay
subscriber balance for the quarter.
(2) We measure the percentage of vehicle owners and lessees that receive
our service and convert to self-paying after the initial promotion
period. We refer to this as the "conversion rate." At the time of
sale, vehicle owners and lessees generally receive between three and
twelve month trial subscriptions. 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
vehicle owners and lessees to respond to our marketing communications
and become self-paying subscribers.
(3) ARPU is derived from total earned subscriber revenue and net
advertising revenue, divided by the number of months in the period,
divided by the daily weighted average number of subscribers for the
period. ARPU is calculated as follows (in thousands, except for
subscriber and per subscriber amounts):

Unaudited Pro Forma
-------------------
For the Three Months For the Twelve Months
Ended December 31, Ended December 31,
------------------ ------------------
2009 2008 2009 2008
---- ---- ---- ----

Subscriber revenue $593,841 $588,622 $2,334,317 $2,258,322
Net advertising revenue 14,467 15,776 51,754 69,933
-------- -------- ---------- ----------
Total subscriber and
net advertising revenue
$608,308 $604,398 $2,386,071 $2,328,255
======== ======== ========== ==========
Daily weighted average
number of subscribers 18,576,151 18,910,689 18,529,696 18,373,274
ARPU $10.92 $10.65 $10.73 $10.56

(4) SAC, as adjusted, per gross subscriber addition is derived from
subscriber acquisition costs and margins from the direct sale of
radios and accessories, excluding share-based payment expense divided
by the number of gross subscriber additions for the period. SAC, as
adjusted, per gross subscriber addition is calculated as follows (in
thousands, except for subscriber and per subscriber amounts):

Unaudited Pro Forma
-------------------
For the Three Months For the Twelve Months
Ended December 31, Ended December 31,
------------------ ------------------
2009 2008 2009 2008
---- ---- ---- ----

Subscriber acquisition cost $127,588 $132,731 $401,670 $577,140
Less: share-based payment
expense granted to third
parties and employees - - - (14)
Less: margin from direct sales
of radios and accessories (6,808) (12,628) (10,164) (3,294)
--------- -------- -------- --------
SAC, as adjusted $120,780 $120,103 $391,506 $573,832
======== ======== ======== ========

Gross subscriber additions 1,882,950 1,713,210 6,208,482 7,710,306
SAC, as adjusted, per gross
subscriber addition $64 $70 $63 $74

(5) Customer service and billing expenses, as adjusted, per average
subscriber is derived from total customer service and billing
expenses, excluding share-based payment expense, divided by the
number of months in the period, divided by the daily weighted average
number of subscribers for the period. Customer service and billing
expenses, as adjusted, per average subscriber is calculated as
follows (in thousands, except for subscriber and per subscriber
amounts):

Unaudited Pro Forma
-------------------
For the Three Months For the Twelve Months
Ended December 31, Ended December 31,
------------------ ------------------
2009 2008 2009 2008
---- ---- ---- ----

Customer service and
billing expenses $58,981 $67,906 $234,909 $248,176
Less: share-based payment
expense (94) (870) (2,504) (3,981)
---------- ---------- ---------- ----------
Customer service and
billing expenses, as
adjusted $58,887 $67,036 $232,405 $244,195
========== ========== ========== ==========
Daily weighted average
number of subscribers 18,576,151 18,910,689 18,529,696 18,373,274
Customer service and
billing expenses, as
adjusted, per average
subscriber $1.06 $1.18 $1.05 $1.11

(6) Free cash flow is calculated as follows:

Unaudited Pro Forma
-------------------
For the Three Months For the Twelve Months
Ended December 31, Ended December 31,
------------------ ------------------
(in thousands) 2009 2008 2009 2008
---- ---- ---- ----

Net cash provided by (used in)
operating activities $180,723 $64,195 $433,830 $(403,883)
Additions to property and
equipment (31,176) (27,846) (248,511) (161,394)
Merger related costs - (10,472) - (23,519)
Restricted and other investment
activity - - - 37,025
-------- ------- -------- ---------
Free cash flow $149,547 $25,877 $185,319 $(551,771)
======== ======= ======== =========

(7) Average self-pay monthly churn; conversion rate; ARPU; SAC, as
adjusted, per gross subscriber addition; customer service and billing
expenses, as adjusted, per average subscriber; and free cash flow are
not measures of financial performance under U.S. generally accepted
accounting principles ("GAAP"). We believe these non-GAAP financial
measures provide meaningful supplemental information regarding our
operating performance and are used by us for budgetary and planning
purposes; when publicly providing our business outlook; as a means to
evaluate period-to-period comparisons; and to compare our performance
to that of our competitors. We also believe that investors also use
our current and projected metrics to monitor the performance of our
business and to make investment decisions.

We believe the exclusion of share-based payment expense in our
calculations of SAC, as adjusted, per gross subscriber addition and
customer service and billing expenses, as adjusted, per average
subscriber is useful given the significant variation in expense that
can result from changes in the fair market value of our common stock,
the effect of which is unrelated to the operational conditions that
give rise to variations in the components of our subscriber
acquisition costs and customer service and billing expenses.
Specifically, the exclusion of share-based payment expense in our
calculation of SAC, as adjusted, per gross subscriber addition is
critical in being able to understand the economic impact of the
direct costs incurred to acquire a subscriber and the effect over
time as economies of scale are reached.

These non-GAAP financial measures are used in addition to and in
conjunction with results presented in accordance with GAAP. These
non-GAAP financial measures may be susceptible to varying
calculations; may not be comparable to other similarly titled
measures of other companies; and should not be considered in
isolation, as a substitute for, or superior to measures of financial
performance prepared in accordance with GAAP.

(8) We refer to net income (loss) before interest and investment income;
interest expense, net of amounts capitalized; income tax expense;
loss on extinguishment of debt and credit facilities, net; (gain)
loss on investments; other expense (income); restructuring,
impairments and related costs; depreciation and amortization; and
share-based payment expense as adjusted income (loss) from
operations. Adjusted income (loss) from operations is not a measure
of financial performance under U.S. GAAP. We believe adjusted income
(loss) from operations is a useful measure of our operating
performance. We use adjusted income (loss) from operations for
budgetary and planning purposes; to assess the relative profitability
and on-going performance of our consolidated operations; to compare
our performance from period-to-period; and to compare our performance
to that of our competitors. We also believe adjusted income (loss)
from operations is useful to investors to compare our operating
performance to the performance of other communications, entertainment
and media companies. We believe that investors use current and
projected adjusted income (loss) from operations to estimate our
current or prospective enterprise value and to make investment
decisions.

Because we fund and build-out our satellite radio system through the
periodic raising and expenditure of large amounts of capital, our
results of operations reflect significant charges for interest and
depreciation expense. We believe adjusted income (loss) from
operations provides useful information about the operating
performance of our business apart from the costs associated with our
capital structure and physical plant. The exclusion of interest and
depreciation and amortization expense is useful given fluctuations in
interest rates and significant variation in depreciation and
amortization expense that can result from the amount and timing of
capital expenditures and potential variations in estimated useful
lives, all of which can vary widely across different industries or
among companies within the same industry. We believe the exclusion of
taxes is appropriate for comparability purposes as the tax positions
of companies can vary because of their differing abilities to take
advantage of tax benefits and because of the tax policies of the
various jurisdictions in which they operate. We believe the exclusion
of restructuring, impairments and related costs is useful given the
non-recurring nature of these expenses. We also believe the exclusion
of share-based payment expense is useful given the significant
variation in expense that can result from changes in the fair market
value of our common stock. To compensate for the exclusion of taxes,
other expense (income), depreciation and amortization and share-based
payment expense, we separately measure and budget for these items.

There are material limitations associated with the use of adjusted
income (loss) from operations in evaluating our company compared with
net loss, which reflects overall financial performance, including the
effects of taxes, other (income) expense, depreciation and
amortization, restructuring, impairments and related costs and share-
based payment expense. We use adjusted income (loss) from operations
to supplement GAAP results to provide a more complete understanding
of the factors and trends affecting the business than GAAP results
alone. Investors that wish to compare and evaluate our operating
results after giving effect for these costs, should refer to net loss
as disclosed in our 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 income (loss) to
the pro forma adjusted income (loss) from operations is calculated as
follows (see footnotes for reconciliation of the pro forma amounts to their respective GAAP amounts):

Unaudited Pro Forma
-------------------
For the Three Months For the Twelve Months
Ended December 31, Ended December 31,
------------------ ------------------
(in thousands) 2009 2008 2009 2008
---- ---- ---- ----

Reconciliation of Net loss to
Adjusted income (loss) from
operations:
Net loss $(25,243) $(248,468) $(441,333) $(902,335)
Add back Net loss items
excluded from Adjusted
income (loss) from operations:
Interest and investment
income (1,043) 90 (3,645) (12,092)
Interest expense, net of
amounts capitalized 69,765 71,274 324,442 235,655
Income tax expense 2,637 175 5,981 3,988
Loss on extinguishment of
debt and facilities, net 3,879 98,203 267,646 98,203
(Gain) loss on investments (1,474) 27,418 (1,931) 43,517
Other (income) expense (851) 5,664 (3,355) 16,142
-------- ------- -------- ---------
Income (loss) from
operations 47,670 (45,644) 147,805 (516,922)
Restructuring, impairments
and related costs 2,640 2,977 32,807 10,434
Depreciation and amortization 57,549 49,519 203,145 245,571
Share-based payment expense 7,480 24,945 78,782 124,619

-------- ------- -------- ---------
Adjusted income (loss) from
operations $115,339 $31,797 $462,539 $(136,298)
======== ======= ======== =========

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 consolidated statements of
operations. Since pro forma unadjusted results of operations is a
non-GAAP financial measure, our calculations may not be comparable to
other similarly titled measures of other companies; and should not be
considered in isolation, as a substitute for, or superior to measures
of financial performance prepared in accordance with GAAP.

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

Unaudited For the Three Months Ended December 31, 2009
------------------------------------------------------
Allocation
Purchase of Share-
Price based
As Accounting Payment Pro
Reported Adjustments Expense Forma
-------- ----------- ----------- -----

Revenue:
Subscriber revenue,
including effects of
rebates $588,048 $5,793 $- $593,841
Advertising revenue,
net of agency fees 14,467 - - 14,467
Equipment revenue 19,008 - - 19,008
Other revenue 54,650 1,813 - 56,463
------- -------- ------ --------
Total revenue 676,173 7,606 - 683,779
Operating expenses
(depreciation and
amortization shown
separately below) (1)
Cost of services:
Satellite and
transmission 24,597 327 170 25,094
Programming and
content 77,297 17,361 (1,801) 92,857
Revenue share and
royalties 100,355 24,172 - 124,527
Customer service
and billing 58,887 94 (94) 58,887
Cost of equipment 12,200 - - 12,200
Sales and marketing 76,308 3,522 331 80,161
Subscriber acquisition
costs 109,733 17,855 - 127,588
General and
administrative 44,601 350 (5,843) 39,108
Engineering, design and
development 8,056 205 (243) 8,018
Depreciation and
amortization 77,826 (20,277) - 57,549
Restructuring,
impairments and related
costs 2,640 - - 2,640
Share-based payment
expense - - 7,480 7,480
------- -------- ------ --------
Total operating expenses 592,500 43,609 - 636,109
------- -------- ------ --------
Income (loss) from
operations 83,673 (36,003) - 47,670
Other income (expense)
Interest and investment
income 1,043 - - 1,043
Interest expense, net
of amounts capitalized (66,358) (3,407) - (69,765)
Loss on extinguishment
of debt and credit
facilities, net (3,879) - - (3,879)
Gain on investments 1,474 - - 1,474
Other income 851 - - 851
------- -------- ------ --------
Total other expense (66,869) (3,407) - (70,276)
------- -------- ------ --------
Income (loss) before
income taxes 16,804 (39,410) - (22,606)
Income tax expense (2,637) - - (2,637)
------- -------- ------ --------
Net income (loss) $14,167 $(39,410) $- $(25,243)
======= ======== ====== ========

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

Satellite and transmission $(276) $106 $- $(170)
Programming and content 1,646 155 - 1,801
Customer service and billing - 94 - 94
Sales and marketing (474) 143 - (331)
Subscriber acquisition costs - - - -
General and administrative 5,493 350 - 5,843
Engineering, design and
development 38 205 - 243

------ ------ -- ------
Total share-based payment
expense $6,427 $1,053 $- $7,480
====== ====== == ======

Unaudited For the Three Months Ended December 31, 2008
------------------------------------------------------
Purchase Allocation
Price of Share-
Accounting based
As Adjustments Payment Pro
Reported (a) Expense Forma
-------- ------------ ----------- -----

Revenue:
Subscriber revenue,
including effects of
rebates $568,523 $20,099 $- $588,622
Advertising revenue,
net of agency fees 15,776 - - 15,776
Equipment revenue 30,712 - - 30,712
Other revenue 7,172 1,826 - 8,998
--------- ------- ------ ---------
Total revenue 622,183 21,925 - 644,108
Operating expenses
(depreciation and
amortization shown
separately below) (1)
Cost of services:
Satellite and
transmission 24,481 (214) (1,416) 22,851
Programming and
content 89,214 20,755 (4,754) 105,215
Revenue share
and royalties 103,217 19,494 - 122,711
Customer service
and billing 67,818 88 (870) 67,036
Cost of equipment 18,084 - - 18,084
Sales and marketing 80,699 3,312 (2,299) 81,712
Subscriber
acquisition costs 113,512 19,219 - 132,731
General and
administrative 64,586 306 (13,301) 51,591
Engineering, design
and development 12,404 281 (2,305) 10,380
Impairment of
goodwill 15,331 (15,331) - -
Depreciation and
amortization 82,958 (33,439) - 49,519
Restructuring,
impairments and
related costs 2,977 - - 2,977
Share-based payment
expense - - 24,945 24,945
--------- ------- ------ ---------
Total operating expenses 675,281 14,471 - 689,752
--------- ------- ------ ---------
(Loss) income from
operations (53,098) 7,454 - (45,644)
Other income (expense)
Interest and
investment income (90) - - (90)
Interest expense,
net of amounts
capitalized (61,196) (10,078) - (71,274)
Loss on
extinguishment of
debt and credit
facilities, net (98,203) - - (98,203)
Loss on investments (27,418) - - (27,418)
Other expense (5,664) - - (5,664)
------ - - ------
Total other expense (192,571) (10,078) - (202,649)
--------- ------- ------ ---------
Loss before income
taxes (245,669) (2,624) - (248,293)
Income tax expense (175) - - (175)
--------- ------- ------ ---------
Net loss $(245,844) $(2,624) $- $(248,468)
========= ======= ====== =========

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

Satellite and transmission $1,349 $67 $- $1,416
Programming and content 4,672 82 - 4,754
Customer service and
billing 783 87 - 870
Sales and marketing 2,165 134 - 2,299
General and
administrative 12,995 306 - 13,301
Engineering, design and
development 2,023 282 - 2,305

--------- ------- ------ ---------
Total share-based
payment expense $23,987 $958 $- $24,945
========= ======= ====== =========
-------------------------
(a) Includes impairment of goodwill.

Unaudited For the Year Ended December 31, 2009
----------------------------------------------
Allocation
Purchase of Share-
Price based
As Accounting Payment Pro
Reported Adjustments Expense Forma
-------- ----------- ----------- -----

Revenue:
Subscriber revenue,
including effects
of rebates $2,287,503 $46,814 $- $2,334,317
Advertising
revenue, net of
agency fees 51,754 - - 51,754
Equipment revenue 50,352 - - 50,352
Other revenue 83,029 7,251 - 90,280
--------- -------- ------ ---------
Total revenue 2,472,638 54,065 - 2,526,703
Operating expenses
(depreciation and
amortization shown
separately below) (1)
Cost of services:
Satellite and
transmission 84,033 1,339 (3,202) 82,170
Programming and
content 308,121 72,069 (9,720) 370,470
Revenue share
and royalties 397,210 89,780 - 486,990
Customer service
and billing 234,456 453 (2,504) 232,405
Cost of equipment 40,188 - - 40,188
Sales and marketing 228,956 13,507 (10,264) 232,199
Subscriber
acquisition costs 340,506 61,164 - 401,670
General and
administrative 227,554 1,602 (47,236) 181,920
Engineering, design
and development 41,031 977 (5,856) 36,152
Depreciation and
amortization 309,450 (106,305) - 203,145
Restructuring,
impairments and
related costs 32,807 - - 32,807
Share-based payment
expense - - 78,782 78,782
--------- -------- ------ ---------
Total operating expenses 2,244,312 134,586 - 2,378,898
--------- -------- ------ ---------
Income (loss) from
operations 228,326 (80,521) - 147,805
Other income (expense)
Interest and
investment income 3,645 - - 3,645
Interest expense,
net of amounts
capitalized (306,420) (18,022) - (324,442)
Loss on
extinguishment of
debt and credit
facilities, net (267,646) - - (267,646)
Gain on investments 1,931 - - 1,931
Other income 3,355 - - 3,355
----- - - -----
Total other expense (565,135) (18,022) - (583,157)
--------- -------- ------ ---------
Loss before income
taxes (336,809) (98,543) - (435,352)
Income tax expense (5,981) - - (5,981)
--------- -------- ------ ---------
Net loss $(342,790) $(98,543) $- $(441,333)
========= ======== ====== =========

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

Satellite and transmission $2,745 $457 $- $3,202
Programming and content 9,064 656 - 9,720
Customer service and
billing 2,051 453 - 2,504
Sales and marketing 9,608 656 - 10,264
Subscriber acquisition
costs - - - -
General and administrative 45,634 1,602 - 47,236
Engineering, design and
development 4,879 977 - 5,856
------- ------ -- -------
Total share-based
payment expense $73,981 $4,801 $- $78,782
======= ====== == =======

Unaudited For the Year Ended December 31, 2008
----------------------------------------------
Purchase Allocation
Price of Share-
Predecessor Accounting based
As Financial Adjust- Payment Pro
Reported Information ments (a) Expense Forma
-------- ----------- ----------- --------- -----

Revenue:
Subscriber revenue,
including effects
of rebates $1,548,919 $670,870 $38,533 $- $2,258,322
Advertising
revenue, net of
agency fees 47,190 22,743 - - 69,933
Equipment revenue 56,001 13,397 - - 69,398
Other revenue 11,882 24,184 3,021 - 39,087
----------- ------- ---------- ------- ---------
Total revenue 1,663,992 731,194 41,554 - 2,436,740
Operating expenses
(depreciation and
amortization shown
separately below) (1)
Cost of services:
Satellite and
transmission 59,279 46,566 424 (7,084) 99,185
Programming
and content 312,189 117,156 34,667 (17,374) 446,638
Revenue
share and
royalties 280,852 166,606 30,504 - 477,962
Customer
service and
billing 165,036 82,947 193 (3,981) 244,195
Cost of
equipment 46,091 20,013 - - 66,104
Sales and
marketing 231,937 126,054 5,393 (21,088) 342,296
Subscriber
acquisition
costs 371,343 174,083 31,714 (14) 577,126
General and
administrative 213,142 116,444 1,083 (63,637) 267,032
Engineering,
design and
development 40,496 23,045 400 (11,441) 52,500
Impairment of
goodwill 4,766,190 - (4,766,190) - -
Depreciation and
amortization 203,752 88,749 (46,930) - 245,571
Restructuring,
impairments and
related costs 10,434 - - - 10,434
Share-based
payment expense - - - 124,619 124,619
----------- ------- ---------- ------- ---------
Total operating
expenses 6,700,741 961,663 (4,708,742) - 2,953,662
----------- ------- ---------- ------- ---------
(Loss) income
from
operations (5,036,749) (230,469) 4,750,296 - (516,922)
Other income
(expense)
Interest and
investment
income 9,079 3,013 - - 12,092
Interest
expense, net of
amounts
capitalized (144,833) (73,937) (16,885) - (235,655)
Loss on
extinguishment
of debt and
credit
facilities, net (98,203) - - - (98,203)
Loss on
investments (30,507) (13,010) - - (43,517)
Other expense (9,599) (6,543) - - (16,142)
----------- ------- ---------- ------- ---------
Total other expense (274,063) (90,477) (16,885) - (381,425)
----------- ------- ---------- ------- ---------
(Loss) income
before income
taxes (5,310,812) (320,946) 4,733,411 - (898,347)
Income tax
expense (2,476) (1,512) - - (3,988)
----------- ------- ---------- ------- ---------
Net (loss)
income $(5,313,288) $(322,458) $4,733,411 $- $(902,335)
=========== ========= ========== ======= =========

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

Satellite and
transmission $4,236 $2,745 $103 $- $7,084
Programming and
content 12,148 4,949 277 - 17,374
Customer service and
billing 1,920 1,869 192 - 3,981
Sales and marketing 13,541 7,047 500 - 21,088
Subscriber
acquisition costs 14 - - - 14
General and
administrative 49,354 13,200 1,083 - 63,637
Engineering, design
and development 6,192 4,675 574 - 11,441
------- ------- ------ -- --------
Total share-
based payment
expense $87,405 $34,485 $2,729 $- $124,619
======= ======= ====== == ========
---------------------
(a) Includes impairment of goodwill.

(10) The following table reconciles our GAAP Net loss per common share
(basic and diluted) to our non-GAAP Net loss per common share (basic
and diluted) excluding the following charges: (a) preferred stock
beneficial conversion feature, (b) loss on extinguishment of debt and
credit facilities, net, and (c) loss on impairment of goodwill.

Unaudited
---------
For the Three For the Twelve
Months Ended Months Ended
December 31, December 31,
------------- -------------
(per share data includes basic and
diluted) 2009 2008 2009 2008
---- ---- ---- ----

Net loss per common share $0.00 $(0.08) $(0.15) $(2.45)
Less: Preferred stock beneficial
conversion feature - - (0.05) -
----- ----- ----- -----
Net loss per common share excluding
preferred stock beneficial conversion
feature 0.00 (0.08) (0.10) (2.45)
Less: Loss on extinguishment of debt and
credit facilities, net (0.00) (0.03) (0.07) (0.05)
----- ----- ----- -----
Net loss per common share excluding loss
on extinguishment of debt and credit
facilities, net and preferred stock
beneficial conversion feature 0.00 (0.05) (0.02) (2.40)
Less: Impairment of goodwill - (0.00) - (2.20)
----- ----- ----- -----
Net loss per common share, excluding
charges $0.00 $(0.04) $(0.02) $(0.21)
===== ====== ====== ======

About SIRIUS XM Radio

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

SIRIUS XM Radio has content relationships with an array of personalities and artists, including Howard Stern, Martha Stewart, Oprah Winfrey, Rosie O'Donnell, Jamie Foxx, Barbara Walters, Opie & Anthony, Bubba the Love Sponge®, Bob Edwards, Chris "Mad Dog" Russo, Jimmy Buffett, The Grateful Dead, Willie Nelson, Bob Dylan and Tom Petty. SIRIUS XM Radio is the leader in sports programming as the Official Satellite Radio Partner of the NFL, Major League Baseball®, NASCAR®, NBA, NHL®, and PGA TOUR® and 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, Wal-Mart and independent retailers.

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

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

The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statement: our substantial indebtedness; the businesses of SIRIUS and XM may not be combined successfully, or such combination may take longer, be more difficult, time-consuming or costly to accomplish than expected; the useful life of our satellites; our dependence upon automakers and other Fourth parties; our competitive position versus other forms of audio and video entertainment; and general economic conditions. Additional factors that could cause SIRIUS' and XM's results to differ materially from those described in the forward-looking statements can be found in SIRIUS' Annual Report on Form 10-K for the year ended December 31, 2008 and XM's Annual Report on Form 10-K for the year ended December 31, 2008, which are filed with the Securities and Exchange Commission (the "SEC") and available at the SEC's Internet site (http://www.sec.gov/). The information set forth herein speaks only as of the date hereof, and SIRIUS and XM disclaim any intention or obligation to update any forward looking statements as a result of developments occurring after the date of this communication.

E-SIRI

Contact Information for Investors and Financial
Media:

Investors:
William Prip
212 584 5289
william.prip@siriusxm.com

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

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

Photo: http://www.newscom.com/cgi-bin/prnh/20080819/NYTU044LOGO
Source: SIRIUS XM Radio

CONTACT: Investors, William Prip, +1-212-584-5289,
william.prip@siriusxm.com, or Hooper Stevens, +1-212-901-6718.
hooper.stevens@siriusxm.com, or Media, Patrick Reilly, +1-212-901-6646,
patrick.reilly@siriusxm.com

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