SiriusXM Reports Fourth Quarter and Full-Year 2013 Results

SiriusXM Reports Fourth Quarter and Full-Year 2013 Results

- 2013 Record Revenue of $3.8 Billion, Up 12%

- Net Income of $377 Million in 2013

- Adjusted EBITDA Climbs 27% in 2013 to $1.17 Billion

- 2013 Free Cash Flow of $927 Million, Up 31%

- Fourth Quarter Revenue Exceeds $1 Billion, Adjusted EBITDA Climbs 41%

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

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

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

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

FOURTH QUARTER 2013 HIGHLIGHTS:


-- Dramatic expansion in adjusted EBITDA. Adjusted EBITDA climbed by 41%
year-over-year in the fourth quarter to a single quarter high of $326
million. Adjusted EBITDA margin reached a record high of 32.5% in the
quarter.
-- Subscriber acquisition costs decline. Total subscriber acquisition
costs were $124 million in the fourth quarter, or just 12% of adjusted
revenue, the lowest percentage in the Company's history. The
improvement in SAC was driven by lower subsidy rates per vehicle. SAC
per gross addition was $44, a record low, a decline of 19% versus the
fourth quarter of 2012.
-- All-time high self-pay subscribers. Self-pay subscriber net additions
were 411,484 in the fourth quarter, resulting in an all-time high
self-pay subscriber base of 21.1 million at year end, up 8%
year-over-year. Paid promotional subscribers declined from the third
quarter by 434,240 as a major OEM shifted to unpaid trials during the
period, resulting in the one-time decline.
FULL-YEAR 2013 HIGHLIGHTS:


-- Continued subscriber growth. Total net subscriber additions for the
full-year were 1,658,974, taking total paid subscribers to 25.6 million
at year-end, up 7% from 23.9 million subscribers at year-end 2012.
-- Adjusted EBITDA reaches new record high. Adjusted EBITDA grew by 27% to
a record high of $1.17 billion. The growth in adjusted EBITDA was
attributable to a 12% increase in revenue, while cash operating expenses
were held to a 6% increase.
-- Free cash flow rises 31%. Free cash flow grew to $927 million in 2013,
a 31% rise from $709 million in 2012. Free cash flow per diluted common
share grew by 41% to $0.15 in 2013 from $0.10 in 2012 as the Company
reduced its shares outstanding through its common stock repurchase
program.
"During the fourth quarter, we completed the first $160 million of the $500 million of share repurchases from Liberty Media, bringing our total 2013 share repurchases to 520 million shares for $1.76 billion, leaving over $2.2 billion remaining under our current authorization," said David Frear, Chief Financial Officer, SiriusXM.

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

2014 GUIDANCE


-- The Company's existing 2014 guidance was reiterated:
-- Revenue of over $4 billion,
-- Net subscriber additions of approximately 1.25 million,
-- Adjusted EBITDA of approximately $1.38 billion, and
-- Free cash flow approaching $1.1 billion.
FOURTH QUARTER AND FULL-YEAR 2013 RESULTS





SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME



For the Three Months Ended For the Twelve Months
Ended
December 31, December 31,
------------ ------------

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

(Unaudited) (Unaudited)

Revenue:

Subscriber revenue $852,547 $774,466 $3,284,660 $2,962,665

Advertising revenue 25,402 22,438 89,288 82,320

Equipment revenue 25,985 22,273 80,573 73,456

Other revenue 96,144 73,238 344,574 283,599
------ ------ ------- -------

Total revenue 1,000,078 892,415 3,799,095 3,402,040

Operating expenses:

Cost of services:

Revenue share and royalties 210,625 141,641 677,642 551,012

Programming and content 73,010 73,795 290,323 278,997

Customer service and billing 83,749 82,346 320,755 294,980

Satellite and transmission 20,251 18,635 79,292 72,615

Cost of equipment 8,669 12,465 26,478 31,766

Subscriber acquisition costs 124,050 126,683 495,610 474,697

Sales and marketing 81,430 72,446 291,024 248,905

Engineering, design and development 15,068 16,374 57,969 48,843

General and administrative 77,522 68,120 262,135 261,905

Depreciation and amortization 60,348 66,814 253,314 266,295

Total operating expenses 754,722 679,319 2,754,542 2,530,015
------- ------- --------- ---------

Income from operations 245,356 213,096 1,044,553 872,025

Other income (expense):

Interest expense, net of amounts capitalized (54,140) (45,545) (204,671) (265,321)

Loss on extinguishment of debt and credit facilities, net (66,229) - (190,577) (132,726)

Interest and investment income 3,328 3,907 6,976 716

Loss on change in value of derivatives (20,393) - (20,393) -

Other income (loss) 295 412 1,204 (226)

Total other expense (137,139) (41,226) (407,461) (397,557)
-------- ------- -------- --------

Income before income taxes 108,217 171,870 637,092 474,468

Income tax (expense) benefit (43,020) (15,626) (259,877) 2,998,234

Net income $65,197 $156,244 $377,215 $3,472,702
======= ======== ======== ==========

Foreign currency translation adjustment, net of tax (136) 87 (428) 49

Comprehensive income $65,061 $156,331 $376,787 $3,472,751
======= ======== ======== ==========

Net income per common share:

Basic $0.01 $0.02 $0.06 $0.55
===== ===== ===== =====

Diluted $0.01 $0.02 $0.06 $0.51
===== ===== ===== =====

Weighted average common shares outstanding:

Basic 6,113,889 5,218,827 6,227,646 4,209,073
========= ========= ========= =========

Diluted 6,203,674 6,634,911 6,384,791 6,873,786
========= ========= ========= =========






SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS



As of December 31,
------------------

2013 2012
---- ----

(in thousands, except share and per share data)

ASSETS

Current assets:

Cash and cash
equivalents $134,805 $520,945

Accounts
receivable, net 103,937 106,142

Receivables from
distributors 88,975 104,425

Inventory, net 13,863 25,337

Prepaid expenses 110,530 122,157

Related party
current assets 9,145 13,167

Deferred tax
asset 937,598 923,972

Other current
assets 20,160 12,037
------ ------

Total current
assets 1,419,013 1,828,182

Property and
equipment, net 1,594,574 1,571,922

Long-term
restricted
investments 5,718 3,999

Deferred
financing fees,
net 12,604 38,677

Intangible
assets, net 2,700,062 2,519,610

Goodwill 2,204,553 1,815,365

Related party
long-term
assets 30,164 44,954

Long-term
deferred tax
asset 868,057 1,219,256

Other long-term
assets 10,035 12,878

Total assets $8,844,780 $9,054,843
========== ==========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable
and accrued
expenses $578,333 $587,652

Accrued interest 42,085 33,954

Current portion
of deferred
revenue 1,586,611 1,474,138

Current portion
of deferred
credit on
executory
contracts 3,781 207,854

Current
maturities of
long-term debt 496,815 4,234

Current
maturities of
long-term
related party
debt 10,959 -

Related party
current
liabilities 20,320 6,756
------ -----

Total current
liabilities 2,738,904 2,314,588

Deferred revenue 149,026 159,501

Deferred credit
on executory
contracts 1,394 5,175

Long-term debt 3,093,821 2,222,080

Long-term
related party
debt - 208,906

Related party
long-term
liabilities 16,337 18,966

Other long-term
liabilities 99,556 86,062

Total
liabilities 6,099,038 5,015,278
--------- ---------

Stockholders' equity:

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

Common stock,
par value shares issued
$0.001; and outstanding
9,000,000,000 at December 31,
shares 2013 and 2012,
authorized at respectively
December 31,
2013 and 2012;
6,096,220,526
and
5,262,440,085 6,096 5,263

Accumulated
other
comprehensive
(loss) income,
net of tax (308) 120

Additional paid-
in capital 8,674,129 10,345,566

Accumulated
deficit (5,934,175) (6,311,390)
---------- ----------

Total
stockholders'
equity 2,745,742 4,039,565
--------- ---------

Total
liabilities and
stockholders'
equity $8,844,780 $9,054,843
========== ==========






SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS



For the Years Ended December 31,
--------------------------------

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

Cash flows from operating activities:

Net income $377,215 $3,472,702

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

Depreciation
and
amortization 253,314 266,295

Non-cash
interest
expense, net
of
amortization
of premium 21,698 35,924

Provision for
doubtful
accounts 39,016 34,548

Amortization of
deferred
income related
to equity
method
investment (2,776) (2,776)

Loss on
extinguishment
of debt and
credit
facilities,
net 190,577 132,726

(Gain) loss on
unconsolidated
entity
investments,
net (5,865) 420

Dividend
received from
unconsolidated
entity
investment 22,065 1,185

Loss on
disposal of
assets 351 657

Loss on change
in value of
derivatives 20,393 -

Share-based
payment
expense 68,876 63,822

Deferred income
taxes 259,787 (3,001,818)

Other non-cash
purchase price
adjustments (207,854) (289,050)

Changes in operating assets and liabilities:

Accounts
receivable (36,189) (38,985)

Receivables
from
distributors 20,944 (19,608)

Inventory 11,474 11,374

Related party
assets 2,031 9,523

Prepaid
expenses and
other current
assets 16,788 647

Other long-
term assets 2,973 22,779

Accounts
payable and
accrued
expenses (44,009) 46,043

Accrued
interest 8,131 (36,451)

Deferred
revenue 73,593 101,311

Related party
liabilities (1,991) (7,545)

Other long-
term
liabilities 12,290 3,042

Net cash
provided by
operating
activities 1,102,832 806,765
--------- -------


Cash flows from investing activities:

Additions to
property and
equipment (173,617) (97,293)

Purchase of
restricted and
other
investments (1,719) (26)

Acquisition of
business, net
of cash
acquired (525,352) -

Net cash used
in investing
activities (700,688) (97,319)
-------- -------


Cash flows from financing activities:

Proceeds from
exercise of
stock options 21,968 123,369

Taxes paid in
lieu of shares
issued for
stock-based
compensation (46,342) -

Proceeds from
long-term
borrowings and
revolving
credit
facility, net
of costs 3,156,063 383,641

Payment of
premiums on
redemption of
debt (175,453) (100,615)

Repayment of
long-term
borrowings and
revolving
credit
facility (1,782,160) (915,824)

Repayment of
related party
long-term
borrowings (200,000) (126,000)

Common stock
repurchased
and retired (1,762,360) -

Dividends paid - (327,062)

Net cash used
in financing
activities (788,284) (962,491)
-------- --------

Net decrease in
cash and cash
equivalents (386,140) (253,045)

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

Cash and cash
equivalents at
end of period $134,805 $520,945
======== ========


Subscriber Data and Operating Metrics

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





Unaudited
---------

For the Three Months Ended December For the Twelve Months Ended
31, December 31,
----------------------------------- ---------------------------

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


Beginning subscribers 25,582,066 23,365,383 23,900,336 21,892,824

Gross subscriber additions 2,409,804 2,553,489 10,136,381 9,617,771

Deactivated subscribers (2,432,560) (2,018,536) (8,477,407) (7,610,259)

Net additions (22,756) 534,953 1,658,974 2,007,512
------- ------- --------- ---------

Ending subscribers 25,559,310 23,900,336 25,559,310 23,900,336
========== ========== ========== ==========


Self-pay 21,081,817 19,570,274 21,081,817 19,570,274

Paid promotional 4,477,493 4,330,062 4,477,493 4,330,062

Ending subscribers 25,559,310 23,900,336 25,559,310 23,900,336
========== ========== ========== ==========


Self-pay 411,484 528,755 1,511,543 1,661,532

Paid promotional (434,240) 6,198 147,431 345,980

Net additions (22,756) 534,953 1,658,974 2,007,512
======= ======= ========= =========


Daily weighted average number of subscribers 25,596,580 23,612,076 24,886,300 22,794,170
========== ========== ========== ==========


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


New vehicle consumer conversion rate 42% 44% 44% 45%
=== === === ===


ARPU $12.46 $12.12 $12.27 $12.00

SAC, per gross subscriber addition $44 $54 $50 $54


Glossary

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

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





Unaudited
---------

For the Three Months Ended For the Twelve Months
Ended
December 31, December 31,
------------ ------------

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


Net income (GAAP): $65,197 $156,244 $377,215 $3,472,702

Add back items excluded from Adjusted EBITDA:

Purchase price accounting adjustments:

Revenues 1,813 1,880 7,251 7,479

Operating expenses (1,068) (68,781) (207,854) (289,278)

Share-based payment expense (GAAP) 19,102 17,462 68,876 63,822

Depreciation and amortization (GAAP) 60,348 66,814 253,314 266,295

Interest expense, net of amounts capitalized (GAAP) 54,140 45,545 204,671 265,321

Loss on extinguishment of debt and credit facilities, net (GAAP) 66,229 - 190,577 132,726

Interest and investment income (GAAP) (3,328) (3,907) (6,976) (716)

Loss on change in value of derivatives (GAAP) 20,393 - 20,393 -

Other (income) loss (GAAP) (295) (412) (1,204) 226

Income tax expense (benefit) (GAAP) 43,020 15,626 259,877 (2,998,234)

Adjusted EBITDA $325,551 $230,471 $1,166,140 $920,343
======== ======== ========== ========


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





Unaudited For the Three Months Ended December 31, 2013
------------------------------------------------------

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


Revenue:

Subscriber revenue $852,547 $ - $ - $852,547

Advertising revenue 25,402 - - 25,402

Equipment revenue 25,985 - - 25,985

Other revenue 96,144 1,813 - 97,957

Total revenue $1,000,078 $1,813 $ - $1,001,891
========== ====== =========================== ==========

Operating expenses

Cost of services:

Revenue share and royalties 210,625 - 210,625

Programming and content 73,010 1,068 (2,071) 72,007

Customer service and billing 83,749 - (591) 83,158

Satellite and transmission 20,251 - (961) 19,290

Cost of equipment 8,669 - - 8,669

Subscriber acquisition costs 124,050 - - 124,050

Sales and marketing 81,430 - (4,678) 76,752

Engineering, design and development 15,068 - (1,947) 13,121

General and administrative 77,522 - (8,854) 68,668

Depreciation and amortization (a) 60,348 - - 60,348

Share-based payment expense - - 19,102 19,102

Total operating expenses $754,722 $1,068 $ - $755,790
======== ====== =========================== ========


(a) Purchase price accounting adjustments included above exclude the incremental depreciation and amortization associated with the $785,000 stepped up basis in property, equipment and intangible
assets as a result of the merger of Sirius and XM. The increased depreciation and amortization for the three months ended December 31, 2013 was $10,000.






Unaudited For the Three Months Ended December 31, 2012
------------------------------------------------------

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


Revenue:

Subscriber revenue $774,466 $67 $ - $774,533

Advertising revenue 22,438 - - 22,438

Equipment revenue 22,273 - - 22,273

Other revenue 73,238 1,813 - 75,051

Total revenue $892,415 $1,880 $ - $894,295
======== ====== =========================== ========

Operating expenses

Cost of services:

Revenue share and royalties 141,641 38,532 - 180,173

Programming and content 73,795 4,781 (1,778) 76,798

Customer service and billing 82,346 - (521) 81,825

Satellite and transmission 18,635 - (918) 17,717

Cost of equipment 12,465 - - 12,465

Subscriber acquisition costs 126,683 21,176 - 147,859

Sales and marketing 72,446 4,292 (2,966) 73,772

Engineering, design and development 16,374 - (1,771) 14,603

General and administrative 68,120 - (9,508) 58,612

Depreciation and amortization (a) 66,814 - - 66,814

Share-based payment expense - - 17,462 17,462

Total operating expenses $679,319 $68,781 $ - $748,100
======== ======= =========================== ========


(a) Purchase price accounting adjustments included above exclude the incremental depreciation and amortization associated with the $785,000 stepped up basis in property, equipment and intangible
assets as a result of the merger of Sirius and XM. The increased depreciation and amortization for the three months ended December 31, 2012 was $13,000.






Unaudited For the Year Ended December 31, 2013
----------------------------------------------

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


Revenue:

Subscriber revenue $3,284,660 $ - $ - $3,284,660

Advertising revenue 89,288 - - 89,288

Equipment revenue 80,573 - - 80,573

Other revenue 344,574 7,251 - 351,825

Total revenue $3,799,095 $7,251 $ - $3,806,346
========== ====== =========================== ==========

Operating expenses

Cost of services:

Revenue share and royalties 677,642 122,534 - 800,176

Programming and content 290,323 8,033 (7,584) 290,772

Customer service and billing 320,755 - (2,219) 318,536

Satellite and transmission 79,292 - (3,714) 75,578

Cost of equipment 26,478 - - 26,478

Subscriber acquisition costs 495,610 64,365 - 559,975

Sales and marketing 291,024 12,922 (14,792) 289,154

Engineering, design and development 57,969 - (7,405) 50,564

General and administrative 262,135 - (33,162) 228,973

Depreciation and amortization (a) 253,314 - - 253,314

Share-based payment expense - - 68,876 68,876

Total operating expenses $2,754,542 $207,854 $ - $2,962,396
========== ======== =========================== ==========


(a) Purchase price accounting adjustments included above exclude the incremental depreciation and amortization associated with the $785,000 stepped up basis in property, equipment and intangible
assets as a result of the merger of Sirius and XM. The increased depreciation and amortization for the year ended December 31, 2013 was $47,000.






Unaudited For the Year Ended December 31, 2012
----------------------------------------------

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


Revenue:

Subscriber revenue $2,962,665 $228 $ - $2,962,893

Advertising revenue 82,320 - - 82,320

Equipment revenue 73,456 - - 73,456

Other revenue 283,599 7,251 - 290,850

Total revenue $3,402,040 $7,479 $ - $3,409,519
========== ====== =========================== ==========

Operating expenses

Cost of services:

Revenue share and royalties 551,012 146,601 - 697,613

Programming and content 278,997 37,346 (6,120) 310,223

Customer service and billing 294,980 - (1,847) 293,133

Satellite and transmission 72,615 - (3,329) 69,286

Cost of equipment 31,766 - - 31,766

Subscriber acquisition costs 474,697 90,503 - 565,200

Sales and marketing 248,905 14,828 (10,310) 253,423

Engineering, design and development 48,843 - (6,238) 42,605

General and administrative 261,905 - (35,978) 225,927

Depreciation and amortization (a) 266,295 - - 266,295

Share-based payment expense - - 63,822 63,822

Total operating expenses $2,530,015 $289,278 $ - $2,819,293
========== ======== =========================== ==========


(a) Purchase price accounting adjustments included above exclude the incremental depreciation and amortization associated with the $785,000 stepped up basis in property, equipment and intangible assets
as a result of the merger of Sirius and XM. The increased depreciation and amortization for the year ended December 31, 2012 was $53,000.


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





Unaudited
---------

For the Three Months Ended For the Twelve Months Ended
December 31, December 31,
------------ ------------

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


Subscriber revenue (GAAP) $852,547 $774,466 $3,284,660 $2,962,665

Add: net advertising revenue (GAAP) 25,402 22,438 89,288 82,320

Add: other subscription-related revenue (GAAP) 79,111 61,299 290,895 237,868

Add: purchase price accounting adjustments - 67 - 228

$957,060 $858,270 $3,664,843 $3,283,081
======== ======== ========== ==========


Daily weighted average number of subscribers 25,596,580 23,612,076 24,886,300 22,794,170
========== ========== ========== ==========


ARPU $12.46 $12.12 $12.27 $12.00
====== ====== ====== ======


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

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





Unaudited
---------

For the Three Months For the Twelve Months
Ended Ended
December 31, December 31,
------------ ------------

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


Customer service and billing expenses (GAAP) $83,749 $82,346 $320,755 $294,980

Less: share-based payment expense (GAAP) (591) (521) (2,219) (1,847)

$83,158 $81,825 $318,536 $293,133
======= ======= ======== ========


Daily weighted average number of subscribers 25,596,580 23,612,076 24,886,300 22,794,170
========== ========== ========== ==========


Customer service and billing expenses, per average subscriber $1.08 $1.16 $1.07 $1.07
===== ===== ===== =====


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





Unaudited
---------

For the Three Months For the Twelve Months
Ended Ended
December 31, December 31,
------------ ------------

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


Cash Flow information

Net cash provided by operating activities $358,575 $293,233 $1,102,832 $806,765

Net cash used in investing activities (580,734) (23,773) (700,688) (97,319)

Net cash used in financing activities (359,820) (304,785) (788,284) (962,491)

Free Cash Flow

Net cash provided by operating activities $358,575 $293,233 $1,102,832 $806,765

Additions to property and equipment (55,382) (23,747) (173,617) (97,293)

Purchase of restricted and other investments - (26) (1,719) (26)

Free cash flow $303,193 $269,460 $927,496 $709,446
======== ======== ======== ========


Diluted weighted average common shares outstanding 6,203,674 6,634,911 6,384,791 6,873,786
========= ========= ========= =========


Free cash flow per fully-diluted share $0.05 $0.04 $0.15 $0.10
===== ===== ===== =====


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

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





Unaudited
---------

For the Three Months For the Twelve Months
Ended Ended
December 31, December 31,
------------ ------------

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


Subscriber acquisition costs (GAAP) $124,050 $126,683 $495,610 $474,697

Less: margin from direct sales of radios and accessories (GAAP) (17,316) (9,808) (54,095) (41,690)

Add: purchase price accounting adjustments - 21,176 64,365 90,503

$106,734 $138,051 $505,880 $523,510
======== ======== ======== ========


Gross subscriber additions 2,409,804 2,553,489 10,136,381 9,617,771
========= ========= ========== =========


SAC, per gross subscriber addition $44 $54 $50 $54
=== === === ===


About SiriusXM

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

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

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


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