SiriusXM Reports Third Quarter 2013 Results

SiriusXM Reports Third Quarter 2013 Results

-- Record Revenue of $962 Million, Up 11% From Third Quarter of 2012

-- Net Income of $63 Million

-- Adjusted EBITDA Grows 21% to a Record $296 Million

-- Free Cash Flow Increases 26% to $245 Million

-- Share Repurchase Program Reaches $1.6 Billion Year to Date

-- Company Issues 2014 Financial Guidance

NEW YORK, Oct. 24, 2013 /PRNewswire/ -- Sirius XM Radio (NASDAQ: SIRI)today announced third quarter 2013 financial and operating results, including record revenue of $962 million, up 11% from the third quarter 2012 revenue of $867 million. Net income for the third quarter of 2013 and 2012 was $63 million and $75 million, respectively, including losses on extinguishment of debt of $108 million and $107 million, respectively. Earnings per fully-diluted share were $0.01 each in the third quarter of 2013 and 2012.

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

Income before income taxes was $124 million in the third quarter 2013, an increase of 128% from $54 million in the third quarter of 2012. Adjusted EBITDA for the third quarter of 2013 reached a record $296 million, up 21% from $245 million in the third quarter of 2012.

"SiriusXM had a great quarter, with the 513,000 net subscriber additions and the 373,000 self-pay net additions setting post-merger records for the third quarter. We also saw double-digit growth in revenue for the seventh consecutive quarter, a new quarterly record for adjusted EBITDA and adjusted EBITDA margin, and significant growth in free cash flow. With continued growth in new automobile sales and an increasing number of existing self-pay subscribers selling their cars and rotating back into our trial funnel, we are increasing our guidance for net subscriber additions and reducing our guidance for self pay subscriber additions by equal amounts. We are also pleased to increase revenue guidance for 2013 and introduce new guidance for continued growth in 2014 in both revenue and adjusted EBITDA," noted Jim Meyer, Chief Executive Officer, SiriusXM.

"We are proud of all we accomplished in the third quarter: strong operating results, significant improvements in our balance sheet, renewals of important long-term programming contracts, and the announced acquisition of the connected vehicle unit of Agero," added Meyer.

Additional highlights of the third quarter include:


-- Subscribers Reach Approximately 25.6 Million. Net subscriber additions
in the quarter were 513,000, up from 446,000 in the third quarter of
2012. The total paid subscriber base reached a record 25.6 million, up
9% from the prior-year period. Self-pay net subscriber additions were
373,000, while the self-pay subscriber base reached a record high of
20.7 million, up 9% from the prior year period. Total paid and unpaid
trials grew by 247,000 from the second quarter of 2013 to 6.9 million.
-- Adjusted EBITDA and Adjusted EBITDA Margin Achieve New Record Highs.
Adjusted EBITDA climbed 21% from last year's third quarter to a record
quarterly figure of $296 million, and those results were accompanied by
a record adjusted EBITDA margin of nearly 31%.
-- Free Cash Flow Climbs 26% in the Third Quarter. Free cash flow in the
third quarter of 2013 was $245 million, up 26% from $195 million in the
third quarter of 2012. Free cash flow per fully-diluted share was 3.9
cents in the third quarter, up 31% from the third quarter of 2012. For
the first nine months of the year, free cash flow climbed 42% to $624
million, and free cash flow per fully-diluted share was 9.7 cents, an
increase of 51% over the same period in 2012.
"We have taken significant steps over the past year to improve our balance sheet, lowering our average cost of debt from 9.2% last summer to just 5.5% following the redemption of the 7.625% Senior Notes due 2018. The new debt we have issued gives our Company greater flexibility to pursue capital returns and other strategic opportunities," said David Frear, SiriusXM's Executive Vice President and Chief Financial Officer.

"During the third quarter, we repurchased approximately 124 million shares of our common stock for $459 million, bringing our year-to-date purchases to approximately 477 million shares for approximately $1.6 billion. We have approximately $2.4 billion remaining under our recently increased share repurchase authorization, and we anticipate using $500 million of this authorization to repurchase shares directly from Liberty Media in three installments beginning next month. At the end of the third quarter, and pro forma for the announced redemption of the 7.625% Senior Notes due 2018, our outstanding debt was a very conservative 3.0x trailing adjusted EBITDA," added Frear.

2013 AND 2014 GUIDANCE

The Company today increased its expectation for 2013 total net subscriber growth and revenue, reduced its estimate for 2013 self-pay net subscriber growth, and reiterated its existing guidance for adjusted EBITDA and free cash flow.


-- Total net subscriber additions of approximately 1.6 million, up from
previous guidance of 1.5 million,
-- Self-pay net subscriber additions of approximately 1.5 million, down
from previous guidance of approximately 1.6 million,
-- Revenue of approximately $3.77 billion, up from previous guidance of
over $3.7 billion,
-- Adjusted EBITDA of approximately $1.14 billion, and
-- Free cash flow of approximately $915 million.
The Company also provided initial guidance for 2014 revenue and adjusted EBITDA:


-- Revenue of over $4.0 billion, and
-- Adjusted EBITDA of approximately $1.38 billion.
THIRD QUARTER 2013 RESULTS




SIRIUS XM RADIO INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)


For the Three Months Ended September 30, For the Nine Months Ended September 30,
---------------------------------------- ---------------------------------------

(in thousands, except per share data) 2013 2012 2013 2012
---- ---- ---- ----


Revenue:

Subscriber revenue $834,053 $757,672 $2,432,113 $2,188,199

Advertising revenue 21,918 20,426 63,886 59,881

Equipment revenue 17,989 17,813 54,588 51,183

Other revenue 87,549 71,449 248,430 210,362
------ ------ ------- -------

Total revenue 961,509 867,360 2,799,017 2,509,625

Operating expenses:

Cost of services:

Revenue share and royalties 162,627 141,834 467,017 409,371

Programming and content 72,322 69,938 217,313 205,203

Customer service and billing 76,322 77,768 237,006 212,635

Satellite and transmission 19,853 18,319 59,041 53,980

Cost of equipment 5,340 6,345 17,809 19,301

Subscriber acquisition costs 125,457 112,418 371,560 348,014

Sales and marketing 75,638 60,676 209,594 176,457

Engineering, design and development 13,007 13,507 42,901 32,468

General and administrative 67,881 68,235 184,613 193,786

Depreciation and amortization 58,533 66,571 192,966 199,481

Total operating expenses 676,980 635,611 1,999,820 1,850,696
------- ------- --------- ---------

Income from operations 284,529 231,749 799,197 658,929

Other income (expense):

Interest expense, net of amounts capitalized (54,629) (70,035) (150,531) (219,777)

Loss on extinguishment of debt and credit facilities, net (107,971) (107,105) (124,348) (132,726)

Interest and investment income (loss) 1,716 (321) 3,648 (3,192)

Other income (loss) 407 113 909 (637)

Total other expense (160,477) (177,348) (270,322) (356,332)
-------- -------- -------- --------

Income before income taxes 124,052 54,401 528,875 302,597

Income tax (expense) benefit (61,158) 20,113 (216,857) 3,013,860

Net income $62,894 $74,514 $312,018 $3,316,457
======= ======= ======== ==========

Foreign currency translation adjustment, net of tax (11) - (292) (38)

Total comprehensive income $62,883 $74,514 $311,726 $3,316,419
======= ======= ======== ==========

Net income per common share:

Basic $0.01 $0.01 $0.05 $0.52
===== ===== ===== =====

Diluted $0.01 $0.01 $0.05 $0.49
===== ===== ===== =====

Weighted average common shares outstanding:

Basic 6,184,216 4,034,122 6,265,981 3,870,031
========= ========= ========= =========

Diluted 6,287,353 6,577,654 6,446,082 6,848,230
========= ========= ========= =========







SIRIUS XM RADIO INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

September 30, 2013 December 31, 2012
------------------ -----------------

(in thousands, except share and per share data) (Unaudited)

ASSETS

Current assets:

Cash and cash equivalents $716,784 $520,945

Accounts receivable, net 102,778 106,142

Receivables from distributors 80,819 104,425

Inventory, net 14,242 25,337

Prepaid expenses 130,794 122,157

Related party current assets 11,141 13,167

Deferred tax asset 887,182 923,972

Other current assets 7,525 12,037
----- ------

Total current assets 1,951,265 1,828,182

Property and equipment, net 1,542,887 1,571,922

Long-term restricted investments 5,718 3,999

Deferred financing fees, net 29,377 38,677

Intangible assets, net 2,482,367 2,519,610

Goodwill 1,815,365 1,815,365

Related party long-term assets 29,385 44,954

Long-term deferred tax asset 1,036,708 1,219,256

Other long-term assets 13,240 12,878

Total assets $8,906,312 $9,054,843
========== ==========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable and accrued expenses $528,173 $587,652

Accrued interest 53,918 33,954

Current portion of deferred revenue 1,522,513 1,474,138

Current portion of deferred credit on executory contracts 3,904 207,854

Current maturities of long-term debt 489,492 4,234

Current maturities of long-term related party debt 49,383 -

Related party current liabilities 6,121 6,756
----- -----

Total current liabilities 2,653,504 2,314,588

Deferred revenue 145,656 159,501

Deferred credit on executory contracts 2,339 5,175

Long-term debt 3,161,372 2,222,080

Long-term related party debt 10,948 208,906

Related party long-term liabilities 16,884 18,966

Other long-term liabilities 80,941 86,062

Total liabilities 6,071,644 5,015,278
--------- ---------


Stockholders' equity:

Preferred stock, par value $0.001; 50,000,000 authorized at September 30, 2013 and December 31, 2012:

Convertible perpetual preferred stock, series B-1 (liquidation preference of $0.001 per share); 0 and - 6

6,250,100 shares issued and outstanding at September 30, 2013 and December 31, 2012, respectively

Common stock, par value $0.001; 9,000,000,000 shares authorized; 6,134,596,655 and 5,262,440,085 shares issued and outstanding, at September 30, 2013 and December 31, 2012, respectively 6,135 5,263

Accumulated other comprehensive (loss) income, net of tax (172) 120

Additional paid-in capital 8,828,077 10,345,566

Accumulated deficit (5,999,372) (6,311,390)
---------- ----------

Total stockholders' equity 2,834,668 4,039,565
--------- ---------

Total liabilities and stockholders' equity $8,906,312 $9,054,843
========== ==========





SIRIUS XM RADIO INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

For the Nine Months Ended September 30,
---------------------------------------

(in thousands) 2013 2012
---- ----

Cash flows from operating activities:

Net income $312,018 $3,316,457

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

Depreciation and amortization 192,966 199,481

Non-cash interest expense, net of amortization of premium 16,506 30,786

Provision for doubtful accounts 28,571 24,953

Amortization of deferred income related to equity method investment (2,082) (2,082)

Loss on extinguishment of debt and credit facilities, net 124,348 132,726

(Gain) loss on unconsolidated entity investments, net (2,831) 4,014

Dividend received from unconsolidated entity investment 17,707 -

Loss on disposal of assets 128 567

Share-based payment expense 49,774 46,361

Deferred income taxes 219,184 (3,017,021)

Other non-cash purchase price adjustments (206,786) (220,336)

Changes in operating assets and liabilities:

Accounts receivable (25,207) (26,211)

Receivables from distributors 23,606 (2,956)

Inventory 11,095 888

Related party assets 2,077 6,905

Prepaid expenses and other current assets (6,665) (26,367)

Other long-term assets (363) 24,454

Accounts payable and accrued expenses (58,680) (27,384)

Accrued interest 19,964 (5,940)

Deferred revenue 34,530 52,777

Related party liabilities (635) (1,314)

Other long-term liabilities (4,968) 2,774

Net cash provided by operating activities 744,257 513,532
------- -------


Cash flows from investing activities:

Additions to property and equipment (118,235) (73,546)

Purchases of restricted and other investments (1,719) -

Net cash used in investing activities (119,954) (73,546)
-------- -------


Cash flows from financing activities:

Proceeds from exercise of stock options 21,819 89,250

Taxes paid in lieu of shares issued for stock-based compensation (27,913) -

Proceeds from long-term borrowings and revolving credit facility, net of costs 2,532,137 393,687

Payment of premiums on redemption of debt (116,410) (100,615)

Repayment of long-term borrowings and revolving credit facility (1,085,737) (914,028)

Repayment of related party long-term borrowings (150,000) (126,000)

Common stock repurchased and retired (1,602,360) -

Net cash used in financing activities (428,464) (657,706)
-------- --------

Net increase (decrease) in cash and cash equivalents 195,839 (217,720)

Cash and cash equivalents at beginning of period 520,945 773,990

Cash and cash equivalents at end of period $716,784 $556,270
======== ========


Subscriber Data and Operating Metrics

The following table contains subscriber data and key operating metrics for the three and nine months ended September 30, 2013 and 2012, respectively:




Unaudited
---------

For the Three Months Ended September 30, For the Nine Months Ended September 30,
---------------------------------------- ---------------------------------------

2013 2012 2013 2012
---- ---- ---- ----


Beginning subscribers 25,068,988 22,919,462 23,900,336 21,892,824

Gross subscriber additions 2,561,175 2,421,586 7,726,577 7,064,282

Deactivated subscribers (2,048,097) (1,975,665) (6,044,847) (5,591,723)

Net additions 513,078 445,921 1,681,730 1,472,559
------- ------- --------- ---------

Ending subscribers 25,582,066 23,365,383 25,582,066 23,365,383
========== ========== ========== ==========


Self-pay 20,670,333 19,041,519 20,670,333 19,041,519

Paid promotional 4,911,733 4,323,864 4,911,733 4,323,864

Ending subscribers 25,582,066 23,365,383 25,582,066 23,365,383
========== ========== ========== ==========


Self-pay 372,597 370,553 1,100,059 1,132,777

Paid promotional 140,481 75,368 581,671 339,782

Net additions 513,078 445,921 1,681,730 1,472,559
======= ======= ========= =========


Daily weighted average number of subscribers 25,267,241 23,008,693 24,646,938 22,519,544
========== ========== ========== ==========


Average self-pay monthly churn 1.8% 2.0% 1.8% 1.9%
=== === === ===


New vehicle consumer conversion rate 44% 44% 44% 45%
=== === === ===


ARPU $12.29 $12.14 $12.21 $11.96

SAC, per gross subscriber addition $52 $51 $52 $55


Glossary

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

Adjusted EBITDA has certain limitations in that it does not take into account the impact to our statements of comprehensive income of certain expenses, including share-based payment expense and certain purchase price accounting for the merger of Sirius and XM. We endeavor to compensate for the limitations of the Non-GAAP measure presented by also providing the comparable GAAP measure with equal or greater prominence and descriptions of the reconciling items, including quantifying such items, to derive the Non-GAAP measure. Investors that wish to compare and evaluate our operating results after giving effect for these costs, should refer to net income as disclosed in our consolidated statements of comprehensive income. Since adjusted EBITDA is a Non-GAAP financial performance measure, our calculation of adjusted EBITDA may be susceptible to varying calculations; may not be comparable to other similarly titled measures of other companies; and should not be considered in isolation, as a substitute for, or superior to measures of financial performance prepared in accordance with GAAP. The reconciliation of net income to the adjusted EBITDA is calculated as follows (in thousands):




Unaudited
---------

For the Three Months Ended September 30, For the Nine Months Ended September 30,
---------------------------------------- ---------------------------------------

2013 2012 2013 2012
---- ---- ---- ----


Net income (GAAP): $62,894 $74,514 $312,018 $3,316,457

Add back items excluded from Adjusted EBITDA:

Purchase price accounting adjustments:

Revenues 1,813 1,854 5,438 5,599

Operating expenses (68,895) (73,049) (206,786) (220,497)

Share-based payment expense (GAAP) 19,762 17,492 49,774 46,361

Depreciation and amortization (GAAP) 58,533 66,571 192,966 199,481

Interest expense, net of amounts capitalized (GAAP) 54,629 70,035 150,531 219,777

Loss on extinguishment of debt and credit facilities, net (GAAP) 107,971 107,105 124,348 132,726

Interest and investment (income) loss (GAAP) (1,716) 321 (3,648) 3,192

Other (income) loss (GAAP) (407) (113) (909) 637

Income tax expense (benefit) (GAAP) 61,158 (20,113) 216,857 (3,013,860)

Adjusted EBITDA $295,742 $244,617 $840,589 $689,873
======== ======== ======== ========


Adjusted Revenues and Operating Expenses - We define this Non-GAAP financial measure as our actual revenues and operating expenses adjusted to exclude the impact of certain purchase price accounting adjustments and share-based payment expense. We use this Non-GAAP financial measure to manage our business, set operational goals and as a basis for determining performance-based compensation for our employees. The following tables reconcile our actual revenues and operating expenses to our adjusted revenues and operating expenses for the three and nine months ended September 30, 2013 and 2012:




Unaudited For the Three Months Ended September 30, 2013
-------------------------------------------------------

(in thousands) As Reported Purchase Price Accounting Adjustments Allocation of Share-based Payment Expense Adjusted
----------- ------------------------------------- ----------------------------------------- --------


Revenue:

Subscriber revenue $834,053 $ - $ - $834,053

Advertising revenue 21,918 - - 21,918

Equipment revenue 17,989 - - 17,989

Other revenue 87,549 1,813 - 89,362

Total revenue $961,509 $1,813 $ - $963,322
======== ====== ============================= ========

Operating expenses

Cost of services:

Revenue share and royalties $162,627 $41,942 $ - $204,569

Programming and content 72,322 2,008 (2,232) 72,098

Customer service and billing 76,322 - (647) 75,675

Satellite and transmission 19,853 - (1,076) 18,777

Cost of equipment 5,340 - - 5,340

Subscriber acquisition costs 125,457 20,342 - 145,799

Sales and marketing 75,638 4,603 (3,871) 76,370

Engineering, design and development 13,007 - (2,177) 10,830

General and administrative 67,881 - (9,759) 58,122

Depreciation and amortization (a) 58,533 - - 58,533

Share-based payment expense - - 19,762 19,762

Total operating expenses $676,980 $68,895 $ - $745,875
======== ======= ============================= ========


(a) Purchase price accounting adjustments included above exclude the incremental depreciation and amortization
associated with the $785,000 stepped up basis in property, equipment and intangible assets as a result of the merger
of Sirius and XM. The increased depreciation and amortization for the three months ended September 30, 2013 was
$12,000.





Unaudited For the Three Months Ended September 30, 2012
-------------------------------------------------------

(in thousands) As Reported Purchase Price Accounting Adjustments Allocation of Share-based Payment Expense Adjusted
----------- ------------------------------------- ----------------------------------------- --------


Revenue:

Subscriber revenue $757,672 $41 $ - $757,713

Advertising revenue 20,426 - - 20,426

Equipment revenue 17,813 - - 17,813

Other revenue 71,449 1,813 - 73,262

Total revenue $867,360 $1,854 $ - $869,214
======== ====== ============================= ========

Operating expenses

Cost of services:

Revenue share and royalties $141,834 $37,199 $ - $179,033

Programming and content 69,938 10,431 (1,736) 78,633

Customer service and billing 77,768 - (512) 77,256

Satellite and transmission 18,319 - (938) 17,381

Cost of equipment 6,345 - - 6,345

Subscriber acquisition costs 112,418 21,712 - 134,130

Sales and marketing 60,676 3,707 (2,931) 61,452

Engineering, design and development 13,507 - (1,753) 11,754

General and administrative 68,235 - (9,622) 58,613

Depreciation and amortization (a) 66,571 - - 66,571

Share-based payment expense - - 17,492 17,492

Total operating expenses $635,611 $73,049 $ - $708,660
======== ======= ============================= ========


(a) Purchase price accounting adjustments included above exclude the incremental depreciation and amortization
associated with the $785,000 stepped up basis in property, equipment and intangible assets as a result of the merger
of Sirius and XM. The increased depreciation and amortization for the three months ended September 30, 2012 was
$13,000.





Unaudited For the Nine Months Ended September 30, 2013
------------------------------------------------------

(in thousands) As Reported Purchase Price Accounting Adjustments Allocation of Share-based Payment Expense Adjusted
----------- ------------------------------------- ----------------------------------------- --------


Revenue:

Subscriber revenue $2,432,113 $ - $ - $2,432,113

Advertising revenue 63,886 - - 63,886

Equipment revenue 54,588 - - 54,588

Other revenue 248,430 5,438 - 253,868

Total revenue $2,799,017 $5,438 $ - $2,804,455
========== ====== ============================= ==========

Operating expenses

Cost of services:

Revenue share and royalties $467,017 $122,534 $ - $589,551

Programming and content 217,313 6,965 (5,513) 218,765

Customer service and billing 237,006 - (1,628) 235,378

Satellite and transmission 59,041 - (2,753) 56,288

Cost of equipment 17,809 - - 17,809

Subscriber acquisition costs 371,560 64,365 - 435,925

Sales and marketing 209,594 12,922 (10,114) 212,402

Engineering, design and development 42,901 - (5,458) 37,443

General and administrative 184,613 - (24,308) 160,305

Depreciation and amortization (a) 192,966 - - 192,966

Share-based payment expense - - 49,774 49,774

Total operating expenses $1,999,820 $206,786 $ - $2,206,606
========== ======== ============================= ==========


(a) Purchase price accounting adjustments included above exclude the incremental depreciation and amortization
associated with the $785,000 stepped up basis in property, equipment and intangible assets as a result of the merger
of Sirius and XM. The increased depreciation and amortization for the nine months ended September 30, 2013 was
$37,000.





Unaudited For the Nine Months Ended September 30, 2012
------------------------------------------------------

(in thousands) As Reported Purchase Price Accounting Adjustments Allocation of Share-based Payment Expense Adjusted
----------- ------------------------------------- ----------------------------------------- --------


Revenue:

Subscriber revenue $2,188,199 $161 $ - $2,188,360

Advertising revenue 59,881 - - 59,881

Equipment revenue 51,183 - - 51,183

Other revenue 210,362 5,438 - 215,800

Total revenue $2,509,625 $5,599 $ - $2,515,224
========== ====== =========================== ==========

Operating expenses

Cost of services:

Revenue share and royalties $409,371 $108,069 $ - $517,440

Programming and content 205,203 32,565 (4,342) 233,426

Customer service and billing 212,635 - (1,327) 211,308

Satellite and transmission 53,980 - (2,411) 51,569

Cost of equipment 19,301 - - 19,301

Subscriber acquisition costs 348,014 69,328 - 417,342

Sales and marketing 176,457 10,535 (7,343) 179,649

Engineering, design and development 32,468 - (4,467) 28,001

General and administrative 193,786 - (26,471) 167,315

Depreciation and amortization (a) 199,481 - - 199,481

Share-based payment expense - - 46,361 46,361

Total operating expenses $1,850,696 $220,497 $ - $2,071,193
========== ======== =========================== ==========


(a) Purchase price accounting adjustments included above exclude the incremental depreciation and amortization
associated with the $785,000 stepped up basis in property, equipment and intangible assets as a result of the
merger of Sirius and XM. The increased depreciation and amortization for the nine months ended September 30, 2012
was $41,000.


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




Unaudited
---------

For the Three Months Ended September 30, For the Nine Months Ended September 30,
---------------------------------------- ---------------------------------------

2013 2012 2013 2012
---- ---- ---- ----


Subscriber revenue (GAAP) $834,053 $757,672 $2,432,113 $2,188,199

Add: advertising revenue (GAAP) 21,918 20,426 63,886 59,881

Add: other subscription-related revenue (GAAP) 75,999 60,095 211,784 176,569

Add: purchase price accounting adjustments - 41 - 161

$931,970 $838,234 $2,707,783 $2,424,810
======== ======== ========== ==========


Daily weighted average number of subscribers 25,267,241 23,008,693 24,646,938 22,519,544
========== ========== ========== ==========


ARPU $12.29 $12.14 $12.21 $11.96
====== ====== ====== ======


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

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




Unaudited
---------

For the Three Months Ended September 30, For the Nine Months Ended September 30,
---------------------------------------- ---------------------------------------

2013 2012 2013 2012
---- ---- ---- ----


Customer service and billing expenses (GAAP) $76,322 $77,768 $237,006 $212,635

Less: share-based payment expense (647) (512) (1,628) (1,327)

$75,675 $77,256 $235,378 $211,308
======= ======= ======== ========


Daily weighted average number of subscribers 25,267,241 23,008,693 24,646,938 22,519,544
========== ========== ========== ==========


Customer service and billing expenses, per average subscriber $1.00 $1.12 $1.06 $1.04
===== ===== ===== =====


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




Unaudited
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For the Three Months Ended September 30, For the Nine Months Ended September 30,
---------------------------------------- ---------------------------------------

2013 2012 2013 2012
---- ---- ---- ----

Cash Flow information

Net cash provided by operating activities $302,236 $219,809 $744,257 $513,532

Net cash used in investing activities $(56,974) $(24,602) $(119,954) $(73,546)

Net cash used in financing activities $(180,247) $(507,267) $(428,464) $(657,706)

Free Cash Flow

Net cash provided by operating activities $302,236 $219,809 $744,257 $513,532

Additions to property and equipment (55,255) (24,602) (118,235) (73,546)

Purchases of restricted and other investments (1,719) - (1,719) -

Free cash flow $245,262 $195,207 $624,303 $439,986
======== ======== ======== ========


Diluted weighted average common shares outstanding 6,287,353 6,577,654 6,446,082 6,848,230
========= ========= ========= =========


Free cash flow per fully-diluted share $0.04 $0.03 $0.10 $0.06
===== ===== ===== =====


New vehicle consumer conversion rate - is defined as the percentage of owners and lessees of new vehicles that receive our service and convert to become self-paying subscribers after the initial promotion period. At the time satellite radio enabled vehicles are sold or leased, the owners or lessees generally receive trial subscriptions ranging from three to twelve months. Promotional periods generally include the period of trial service plus 30 days to handle the receipt and processing of payments. We measure conversion rate three months after the period in which the trial service ends. The metric excludes rental and fleet vehicles.

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




Unaudited
---------

For the Three Months Ended September 30, For the Nine Months Ended September 30,
---------------------------------------- ---------------------------------------

2013 2012 2013 2012
---- ---- ---- ----


Subscriber acquisition costs (GAAP) $125,457 $112,418 $371,560 $348,014

Less: margin from direct sales of radios and accessories (GAAP) (12,649) (11,468) (36,779) (31,882)

Add: purchase price accounting adjustments 20,342 21,712 64,365 69,328

$133,150 $122,662 $399,146 $385,460
======== ======== ======== ========


Gross subscriber additions 2,561,175 2,421,586 7,726,577 7,064,282
========= ========= ========= =========


SAC, per gross subscriber addition $52 $51 $52 $55
=== === === ===
About Sirius XM Radio

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

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

This communication contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about future financial and operating results, our plans, objectives, expectations and intentions with respect to future operations, products and services; and other statements identified by words such as "will likely result," "are expected to," "will continue," "is anticipated," "estimated," "believe," "intend," "plan," "projection," "outlook" or words of similar meaning. Such forward-looking statements are based upon the current beliefs and expectations of our management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are difficult to predict and generally beyond our control. Actual results may differ materially from the results anticipated in these forward-looking statements.

The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements: our competitive position versus other forms of radio and audio services; our dependence upon automakers; general economic conditions; failure of our satellites, which, in most cases, are not insured; our ability to attract and retain subscribers at a profitable level; royalties we pay for music rights; the unfavorable outcome of pending or future litigation; rapid technological and industry change; failure of third parties to perform; changes in consumer protection laws and their enforcement; and our substantial indebtedness. Additional factors that could cause our results to differ materially from those described in the forward-looking statements can be found in our Annual Report on Form 10-K for the year ended December 31, 2012, which is filed with the Securities and Exchange Commission (the "SEC") and available at the SEC's Internet site (http://www.sec.gov). The information set forth herein speaks only as of the date hereof, and we disclaim any intention or obligation to update any forward looking statements as a result of developments occurring after the date of this communication.

E-SIRI

Contact Information for Investors and Financial Media:

Investors:

Hooper Stevens

212 901 6718
hooper.stevens@siriusxm.com

Media:

Patrick Reilly

212 901 6646
patrick.reilly@siriusxm.com



SOURCE Sirius XM Radio

Photo:http://photos.prnewswire.com/prnh/20101014/NY82093LOGO
http://photoarchive.ap.org/
Sirius XM Radio

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


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