Exhibit 99.1

 

 

SiriusXM Reports Fourth Quarter and Full-Year 2014 Results

 

·2014 Revenue Climbs 10% to $4.18 Billion
·Net Income Increases 31% to $493 Million in 2014
·Record Adjusted EBITDA of $1.47 Billion in 2014, up 26%
·2014 Free Cash Flow Reaches Record $1.16 Billion, up 25%
·$2.5 Billion of Stock Repurchased in 2014

 

NEW YORK – February 5, 2015 –

SiriusXM today announced fourth quarter and full-year 2014 operating and financial results, including record revenue of $1.09 billion and $4.18 billion for the fourth quarter and full-year, respectively, up 9% and 10% versus the prior year periods.

 

Net income of $143 million and $493 million in the fourth quarter and full-year 2014, respectively, compared to $65 million and $377 million in the fourth quarter and full-year 2013. Net income per diluted common share was $0.03 and $0.08, respectively, in the fourth quarter and full-year 2014, versus $0.01 and $0.06 in the fourth quarter and full-year 2013. Adjusted EBITDA was $381 million and $1.47 billion, respectively, in the fourth quarter and full-year, up 17% and 26% versus the prior year periods.

 

“As our results demonstrate, SiriusXM had a great year by delivering to subscribers new and exciting music, sports, and talk programming; executing on our growth plan; and driving 36% growth in free cash flow per diluted share, all while investing in the future of the connected car,” said Jim Meyer, Chief Executive Officer, SiriusXM.

 

“We have once again set ambitious targets for 2015 to grow our subscriber base, revenue, adjusted EBITDA, and free cash flow to new, record-high levels. I’m confident in our ability to be creative and innovative as the leader in audio entertainment, making our superior service an even better experience for our subscribers in 2015,” added Meyer.

 

FOURTH QUARTER 2014 HIGHLIGHTS

 

·Strong fourth quarter net subscriber gains. SiriusXM recorded 576,689 net new subscribers in the fourth quarter, marking the largest fourth-quarter increase since 2007. Self-pay net subscriber additions were 508,032 in the fourth quarter of 2014 compared to 411,484 in the fourth quarter of 2013.
·Record high fourth quarter adjusted EBITDA. Adjusted EBITDA of $381 million in the fourth quarter of 2014 was the highest quarterly amount in the company’s history, an increase of 17% over the fourth quarter 2013.
 
·Record free cash flow per diluted share. Free cash flow reached a fourth quarter record of $331 million, while free cash flow per diluted share reached an all-time high of 5.9 cents in the fourth quarter of 2014, up 20% from the fourth quarter of 2013.

 

FULL-YEAR 2014 HIGHLIGHTS

 

·Full-year subscriber gains exceed targets. SiriusXM reported 2014 total and self-pay net subscriber additions, respectively, of 1,751,777 and 1,440,821, each ahead of the company’s original full-year guidance of 1,250,000. The company ended 2014 with 27.3 million total paying subscribers and 22.5 million self-pay subscribers, each up 7% from the end of 2013.
·Share buybacks reach $2.5 billion in 2014. The company returned $2.5 billion to stockholders by repurchasing 739 million shares in 2014. As of year-end, approximately $1.7 billion remained under the company’s existing $6 billion share repurchase authorization.
·Record-high adjusted EBITDA and margin. Adjusted EBITDA grew 26% to a record $1.47 billion in 2014 from $1.17 billion in 2013. Adjusted EBITDA margin grew approximately 440 basis points to a record high 35.0%.
·Rapid expansion of free cash flow. SiriusXM reported $1.16 billion of free cash flow in 2014, up 25% from $927 million in 2013. The company reported 19.7 cents of free cash flow per diluted share in 2014, up 36% from 14.5 cents per diluted share in 2013.

 

“Our repurchases of 739 million shares in 2014 represented approximately 12% of the shares outstanding at the beginning of last year. Even as we returned $2.5 billion to our stockholders, SiriusXM’s leverage remained steady at about 3.1 times EBITDA, a result of rapid growth in adjusted EBITDA and the conversion of our 7% Exchangeable Notes into equity in December. In the two years since we began our capital return program with a special dividend, we have paid our shareholders over $4.8 billion and retired more than 1.3 billion shares,” noted David Frear, Chief Financial Officer, SiriusXM.

 

2015 GUIDANCE

 

The company also reiterated its 2015 guidance, originally given on January 7, 2015, for net subscriber additions, revenue, adjusted EBITDA, and free cash flow:

 

·Net subscriber additions of approximately 1.2 million,
·Revenue of approximately $4.4 billion,
·Adjusted EBITDA of approximately $1.6 billion, and
·Free cash flow of approximately $1.25 billion.

 

FOURTH QUARTER AND FULL-YEAR 2014 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)  2014   2013   2014   2013 
   (Unaudited)   (Unaudited)         
Revenue:                    
Subscriber revenue  $922,192   $852,547   $3,554,302   $3,284,660 
Advertising revenue   27,970    25,402    100,982    89,288 
Equipment revenue   29,938    25,985    104,661    80,573 
Other revenue   110,852    96,144    421,150    344,574 
Total revenue  1,090,952   1,000,078   4,181,095   3,799,095 
Operating expenses:                    
Cost of services:                    
Revenue share and royalties   210,089    210,625    810,028    677,642 
Programming and content   77,953    73,010    297,313    290,323 
Customer service and billing   96,411    83,749    370,585    320,755 
Satellite and transmission   21,567    20,251    86,013    79,292 
Cost of equipment   15,078    8,669    44,397    26,478 
Subscriber acquisition costs   126,257    124,050    493,464    495,610 
Sales and marketing   98,488    81,430    336,480    291,024 
Engineering, design and development   15,107    15,068    62,784    57,969 
General and administrative   69,943    77,522    293,938    262,135 
Depreciation and amortization   66,402    60,348    266,423    253,314 
Total operating expenses   797,295    754,722    3,061,425    2,754,542 
Income from operations   293,657    245,356    1,119,670    1,044,553 
Other income (expense):                    
Interest expense, net of amounts capitalized   (71,981)   (54,140)   (269,010)   (204,671)
Loss on extinguishment of debt and credit facilities, net       (66,229)       (190,577)
Interest and investment income   5,910    3,328    15,498    6,976 
Loss on change in value of derivatives       (20,393)   (34,485)   (20,393)
Other income (loss)   467    295    (887)   1,204 
Total other expense   (65,604)   (137,139)   (288,884)   (407,461)
Income before income taxes   228,053    108,217    830,786    637,092 
Income tax expense   (84,931)   (43,020)   (337,545)   (259,877)
Net income  $143,122   $65,197   $493,241   $377,215 
Foreign currency translation adjustment, net of tax   (114)   (136)   (94)   (428)
Total comprehensive income  $143,008   $65,061   $493,147   $376,787 
Net income per common share:                    
Basic  $0.03   $0.01   $0.09   $0.06 
Diluted  $0.03   $0.01   $0.08   $0.06 
Weighted average common shares outstanding:                    
Basic   5,577,325    6,113,889    5,788,944    6,227,646 
Diluted   5,643,839    6,203,674    5,862,020    6,384,791 
 

SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

 

   As of December 31,   As of December 31, 
(in thousands, except share and per share data)  2014   2013 
ASSETS          
Current assets:          
Cash and cash equivalents  $147,724   $134,805 
Receivables, net   220,579    192,912 
Inventory, net   19,397    13,863 
Prepaid expenses   116,336    110,530 
Related party current assets   4,344    9,145 
Deferred tax asset   1,038,603    937,598 
Other current assets   2,763    20,160 
Total current assets   1,549,746    1,419,013 
Property and equipment, net   1,510,112    1,594,574 
Long-term restricted investments   5,922    5,718 
Deferred financing fees, net   12,021    12,604 
Intangible assets, net   2,645,046    2,700,062 
Goodwill   2,205,107    2,204,553 
Related party long-term assets   3,000    30,164 
Long-term deferred tax asset   437,736    868,057 
Other long-term assets   6,819    10,035 
Total assets  $8,375,509   $8,844,780 
LIABILITIES AND STOCKHOLDERS’ EQUITY          
Current liabilities:          
Accounts payable and accrued expenses  $587,755   $578,333 
Accrued interest   80,440    42,085 
Current portion of deferred revenue   1,632,381    1,586,611 
Current portion of deferred credit on executory contracts   1,394    3,781 
Current maturities of long-term debt   7,482    496,815 
Current maturities of long-term related party debt       10,959 
Related party current liabilities   4,340    20,320 
Total current liabilities   2,313,792    2,738,904 
Deferred revenue   151,901    149,026 
Deferred credit on executory contracts       1,394 
Long-term debt   4,493,863    3,093,821 
Related party long-term liabilities   13,635    16,337 
Other long-term liabilities   92,481    99,556 
Total liabilities   7,065,672    6,099,038 
Stockholders’ equity:          
Preferred stock, undesignated, par value $0.001 (liquidation preference of $0.001 per share); 50,000,000 shares authorized and 0 shares issued and outstanding at December 31, 2014 and December 31, 2013        
Common stock, par value $0.001; 9,000,000,000 shares authorized; 5,653,529,403 and 6,096,220,526 shares issued; 5,646,119,122 and 6,096,220,526 outstanding at December 31, 2014 and December 31, 2013, respectively   5,653    6,096 
Accumulated other comprehensive loss, net of tax   (402)   (308)
Additional paid-in capital   6,771,554    8,674,129 
Treasury stock, at cost; 7,410,281 and 0 shares of common stock at December 31, 2014 and December 31, 2013, respectively   (26,034)    
Accumulated deficit   (5,440,934)   (5,934,175)
Total stockholders’ equity   1,309,837    2,745,742 
Total liabilities and stockholders’ equity  $8,375,509   $8,844,780 
 

SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

   For the Years Ended December 31, 
(in thousands)  2014   2013 
Cash flows from operating activities:          
Net income  $493,241   $377,215 
Adjustments to reconcile net income to net cash provided by operating activities:          
Depreciation and amortization   266,423    253,314 
Non-cash interest expense, net of amortization of premium   21,039    21,698 
Provision for doubtful accounts   44,961    39,016 
Amortization of deferred income related to equity method investment   (2,776)   (2,776)
Loss on extinguishment of debt and credit facilities, net       190,577 
Gain on unconsolidated entity investments, net   (5,547)   (5,865)
Dividend received from unconsolidated entity investment   17,019    22,065 
Loss on disposal of assets   220    351 
Loss on change in value of derivatives   34,485    20,393 
Share-based payment expense   78,212    68,876 
Deferred income taxes   327,461    259,787 
Other non-cash purchase price adjustments   (3,781)   (207,854)
Changes in operating assets and liabilities:          
Receivables   (72,628)   (15,245)
Inventory   (5,534)   11,474 
Related party assets   (4,097)   2,031 
Prepaid expenses and other current assets   (1,195)   16,788 
Other long-term assets   3,173    2,973 
Accounts payable and accrued expenses   (17,191)   (44,009)
Accrued interest   38,355    8,131 
Deferred revenue   48,645    73,593 
Related party liabilities   (206)   (1,991)
Other long-term liabilities   (7,035)   12,290 
Net cash provided by operating activities   1,253,244    1,102,832 
           
Cash flows from investing activities:          
Additions to property and equipment   (121,646)   (173,617)
Purchases of restricted and other investments       (1,719)
Acquisition of business, net of cash acquired   1,144    (525,352)
Return of capital from investment in unconsolidated entity   24,178     
Net cash used in investing activities   (96,324)   (700,688)
           
Cash flows from financing activities:          
Proceeds from exercise of stock options   331    21,968 
Taxes paid in lieu of shares issued for stock-based compensation   (37,318)   (46,342)
Proceeds from long-term borrowings and revolving credit facility, net of costs   2,406,205    3,156,063 
Payment of premiums on redemption of debt       (175,453)
Repayment of long-term borrowings and revolving credit facility   (1,016,420)   (1,782,160)
Repayment of related party long-term borrowings       (200,000)
Common stock repurchased and retired   (2,496,799)   (1,762,360)
Net cash used in financing activities   (1,144,001)   (788,284)
Net increase (decrease) in cash and cash equivalents   12,919    (386,140)
Cash and cash equivalents at beginning of period   134,805    520,945 
Cash and cash equivalents at end of period  $147,724   $134,805 

 

Key Operating Metrics

 

The following table contains our key operating metrics for the three and twelve months ended December 31, 2014 and 2013, 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, 
(in thousands, except subscriber, per subscriber and per installation amounts)  2014   2013   2014   2013 
                 
Self-pay subscribers   22,522,638    21,081,817    22,522,638    21,081,817 
Paid promotional subscribers   4,788,449    4,477,493    4,788,449    4,477,493 
Ending subscribers   27,311,087    25,559,310    27,311,087    25,559,310 
                     
Self-pay subscribers   508,032    411,484    1,440,821    1,511,543 
Paid promotional subscribers   68,657    (434,240)   310,956    147,431 
Net additions   576,689    (22,756)   1,751,777    1,658,974 
                     
Daily weighted average number of subscribers   27,021,501    25,596,580    26,283,785    24,886,300 
                     
Average self-pay monthly churn   1.8%   1.9%   1.9%   1.8%
                     
New vehicle consumer conversion rate   40%   42%   41%   44%
                     
ARPU  $12.49   $12.31   $12.38   $12.23 
SAC, per installation  $33   $34   $34   $43 
Customer service and billing expenses, per average subscriber  $1.07   $1.04   $1.07   $1.06 
Free cash flow  $330,674   $303,193   $1,155,776   $927,496 
Adjusted EBITDA  $381,306   $325,551   $1,467,775   $1,166,140 

 

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 exclude 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 share-based payment expense is not directly related to the operational conditions of our business.

 

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,
 
   2014   2013   2014   2013 
                     
Net income (GAAP):  $143,122   $65,197   $493,241   $377,215 
Add back items excluded from Adjusted EBITDA:                    
Purchase price accounting adjustments:                    
Revenues   1,813    1,813    7,251    7,251 
Operating expenses   (946)   (1,068)   (3,781)   (207,854)
Share-based payment expense (GAAP)   20,380    19,102    78,212    68,876 
Depreciation and amortization (GAAP)   66,402    60,348    266,423    253,314 
Interest expense, net of amounts capitalized (GAAP)   71,981    54,140    269,010    204,671 
Loss on extinguishment of debt and credit facilities, net (GAAP)       66,229        190,577 
Interest and investment income (GAAP)   (5,910)   (3,328)   (15,498)   (6,976)
Loss on change in value of derivatives (GAAP)       20,393    34,485    20,393 
Other (income) loss (GAAP)   (467)   (295)   887    (1,204)
Income tax expense (GAAP)   84,931    43,020    337,545    259,877 
Adjusted EBITDA  $381,306   $325,551   $1,467,775   $1,166,140 

 

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 from the merger of Sirius and XM and share-based payment expense. We use this Non-GAAP financial measure to manage our business, to 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, 2014 and 2013:

 

   Unaudited For the Three Months Ended December 31, 2014 
(in thousands)  As Reported   Purchase Price
Accounting
Adjustments
   Allocation of
Share-based
Payment Expense
   Adjusted 
                     
Revenue:                    
Subscriber revenue  $922,192   $   $   $922,192 
Advertising revenue   27,970            27,970 
Equipment revenue   29,938            29,938 
Other revenue   110,852    1,813        112,665 
Total revenue  $1,090,952   $1,813   $   $1,092,765 
Operating expenses                    
Cost of services:                    
Revenue share and royalties  $210,089   $   $   $210,089 
Programming and content   77,953    946    (2,277)   76,622 
Customer service and billing   96,411        (748)   95,663 
Satellite and transmission   21,567        (1,004)   20,563 
Cost of equipment   15,078            15,078 
Subscriber acquisition costs   126,257            126,257 
Sales and marketing   98,488        (4,216)   94,272 
Engineering, design and development   15,107        (2,253)   12,854 
General and administrative   69,943        (9,882)   60,061 
Depreciation and amortization (a)   66,402            66,402 
Share-based payment expense           20,380    20,380 
Total operating expenses  $797,295   $946   $   $798,241 

 

(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, 2014 was $9,000.

 
   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 Twelve Months Ended December 31, 2014 
(in thousands)  As Reported   Purchase Price Accounting Adjustments   Allocation of Share-based Payment Expense   Adjusted 
                 
Revenue:                    
Subscriber revenue  $3,554,302   $   $   $3,554,302 
Advertising revenue   100,982            100,982 
Equipment revenue   104,661            104,661 
Other revenue   421,150    7,251        428,401 
Total revenue  $4,181,095   $7,251   $   $4,188,346 
Operating expenses                    
Cost of services:                    
Revenue share and royalties  $810,028   $   $   $810,028 
Programming and content   297,313    3,781    (9,180)   291,914 
Customer service and billing   370,585        (2,780)   367,805 
Satellite and transmission   86,013        (4,091)   81,922 
Cost of equipment   44,397            44,397 
Subscriber acquisition costs   493,464            493,464 
Sales and marketing   336,480        (15,454)   321,026 
Engineering, design and development   62,784        (8,675)   54,109 
General and administrative   293,938        (38,032)   255,906 
Depreciation and amortization (a)   266,423            266,423 
Share-based payment expense           78,212    78,212 
Total operating expenses  $3,061,425   $3,781   $   $3,065,206 

 

(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, 2014 was $39,000.

 
   Unaudited For the Twelve Months 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.

 

Adjusted Cash Operating Expenses - We define this Non-GAAP financial measure as our actual operating expenses adjusted to exclude the impact of certain purchase price accounting adjustments from the merger of Sirius and XM, depreciation and amortization expense, and share-based payment expense. The following table reconciles our actual operating expenses to our adjusted cash operating expenses for the three and twelve months ended December 31, 2014 and 2013:

 

   Unaudited 
   For the Three Months Ended December 31,   For the Twelve Months Ended December 31, 
   2014   2013   2014   2013 
                     
Operating expenses (GAAP):  $797,295   $754,722   $3,061,425   $2,754,542 
Items excluded from adjusted cash operating expenses:                    
Purchase price accounting adjustments   946    1,068    3,781    207,854 
Share-based payment expense (GAAP)   (20,380)   (19,102)   (78,212)   (68,876)
Depreciation and amortization (GAAP)   (66,402)   (60,348)   (266,423)   (253,314)
Adjusted cash operating expenses  $711,459   $676,340   $2,720,571   $2,640,206 

 

ARPU - is derived from total earned subscriber revenue, advertising revenue and other subscription-related revenue, excluding revenue associated with our connected vehicle business, 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. 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, 
   2014   2013   2014   2013 
Subscriber revenue, excluding connected vehicle (GAAP)  $897,308   $840,605   $3,466,050   $3,272,718 
Add: advertising revenue (GAAP)   27,970    25,402    100,982    89,288 
Add: other subscription-related revenue (GAAP)   87,270    79,111    336,408    290,895 
   $1,012,548   $945,118   $3,903,440   $3,652,901 
                     
Daily weighted average number of subscribers   27,021,501    25,596,580    26,283,785    24,886,300 
                     
ARPU  $12.49   $12.31   $12.38   $12.23 

 

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 connected vehicle customer service and billing expenses and 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 as share-based payment expense is not directly related 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, 
   2014   2013   2014   2013 
Customer service and billing expenses, excluding connected vehicle (GAAP)  $87,417   $80,826   $340,094   $317,832 
Less: share-based payment expense (GAAP)   (748)   (591)   (2,780)   (2,219)
   $86,669   $80,235   $337,314   $315,613 
                     
Daily weighted average number of subscribers   27,021,501    25,596,580    26,283,785    24,886,300 
                     
Customer service and billing expenses, per average subscriber  $1.07   $1.04   $1.07   $1.06 

 

Free cash flow and free cash flow per diluted share - are 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 diluted share are as follows (in thousands, except share and per share data):

 

   Unaudited 
   For the Three Months Ended December 31,   For the Twelve Months Ended December 31, 
   2014   2013   2014   2013 
Cash Flow information                    
Net cash provided by operating activities  $365,076   $358,575   $1,253,244   $1,102,832 
Net cash used in investing activities  $(34,402)  $(580,734)  $(96,324)  $(700,688)
Net cash used in financing activities  $(286,535)  $(359,820)  $(1,144,001)  $(788,284)
Free Cash Flow                    
Net cash provided by operating activities  $365,076   $358,575   $1,253,244   $1,102,832 
Additions to property and equipment   (34,402)   (55,382)   (121,646)   (173,617)
Purchases of restricted and other investments               (1,719)
Return of capital from investment in unconsolidated entity           24,178     
Free cash flow  $330,674   $303,193   $1,155,776   $927,496 
                     
Diluted weighted average common shares outstanding   5,643,839    6,203,674    5,862,020    6,384,791 
                     
Free cash flow per diluted share  $0.059   $0.049   $0.197   $0.145 

 

New vehicle consumer conversion rate - is defined as the percentage of owners and lessees of new vehicles that receive our satellite radio 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. 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 installation - or SAC, per installation, 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 satellite radio installations in new vehicles and shipments of aftermarket radios 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 installation, is calculated as follows (in thousands, except for installation amounts):

 
   Unaudited 
   For the Three Months Ended
December 31,
   For the Twelve Months Ended
December 31,
 
   2014   2013   2014   2013 
Subscriber acquisition costs (GAAP)  $126,257   $124,050   $493,464   $495,610 
Less: margin from direct sales of radios and accessories (GAAP)   (14,860)   (17,316)   (60,264)   (54,095)
Add: purchase price accounting adjustments               64,365 
   $111,397   $106,734   $433,200   $505,880 
                     
Installations   3,391,422    3,107,237    12,787,537    11,765,078 
                     
SAC, per installation  $33   $34   $34   $43 

 

###

 

About SiriusXM

 

Sirius XM Holdings Inc. (NASDAQ: SIRI) is the world’s largest radio broadcaster measured by revenue and has 27.3 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 radio and audio entertainment providers; our ability to attract and retain subscribers, which is uncertain; our dependence upon the auto industry; general economic conditions; failure of our satellites, which, in most cases, are not insured; the interruption or failure of our information and communications systems; the security of the personal information about our customers; royalties we pay for music rights, which increase over time; the unfavorable outcome of pending or future litigation; our failure to realize benefits of acquisitions; rapid technological and industry change; failure of third parties to perform; changes in consumer protection laws and their enforcement; failure to comply with FCC requirements and other government regulations; and our 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, 2013, 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 Thursday, February 5, 2015 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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