Exhibit 99.1

 

 

 

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 – February 4, 2014 –

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.

 

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 million, 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 December 31,   For the Twelve Months Ended 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 preferred stock, series B-1 par value $0.001 (liquidation preference of $0.001 per share); 50,000,000 authorized and 0 and 6,250,100 shares issued and outstanding at December 31, 2013 and 2012, respectively       6 
Common stock, par value $0.001; 9,000,000,000 shares authorized at December 31, 2013 and 2012; 6,096,220,526 and 5,262,440,085 shares issued and outstanding at December 31, 2013 and 2012, respectively   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 31,    For the Twelve Months Ended 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
December 31,
   For the Twelve Months Ended
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
Accounting
Adjustments
   Allocation of
Share-based
Payment Expense
   Adjusted 
                 
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
Accounting
Adjustments
   Allocation of
Share-based
Payment Expense
   Adjusted 
                 
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
Accounting
Adjustments
   Allocation of
Share-based
Payment Expense
   Adjusted 
                 
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
Accounting
Adjustments
   Allocation of
Share-based
Payment Expense
   Adjusted 
                 
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
December 31,
   For the Twelve Months Ended
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 Ended
December 31,
   For the Twelve Months Ended
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 Ended
December 31,
   For the Twelve Months Ended
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 Ended
December 31,
   For the Twelve Months Ended
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™, SiriusXM Travel Link, NavTraffic®, NavWeather™, SiriusXM Aviation, SiriusXM Marine™, Sirius Marine Weather, XMWX Aviation™, and XMWX Marine™. 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

 

The following information was filed by Sirius Xm Holdings Inc. (SIRI) on Tuesday, February 4, 2014 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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