Exhibit 99.1

 

 

 

SiriusXM Reports Fourth Quarter and Full-Year 2015 Results

 

·2015 Revenue Up 9% to a Record $4.6 Billion
·Net Income Grows to $510 Million in 2015
·2015 Adjusted EBITDA Climbs 13% to a Record $1.66 Billion
·Free Cash Flow Per Fully-Diluted Share Increases 23% in 2015 to 24 Cents
·Net Subscriber Growth in 2015 of 2.3 Million

 

NEW YORK – February 2, 2016 –

SiriusXM today announced fourth quarter and full-year 2015 operating and financial results, including record revenue of $1.2 billion and $4.6 billion, respectively, up 10% and 9% versus the prior year periods.

 

Net income totaled $135 million and $510 million in the fourth quarter and full-year 2015, respectively, compared to $143 million and $493 million in the fourth quarter and full-year 2014. Net income per diluted common share was $0.03 and $0.09 in the fourth quarter and full-year 2015, respectively, versus $0.03 and $0.08 in the fourth quarter and full-year 2014. Adjusted EBITDA was $396 million and $1.66 billion in the fourth quarter and full-year, respectively, up 4% and 13% compared to the prior year periods.

 

“We produced our best subscriber growth in eight years, taking our subscriber base to approximately 29.6 million. The company also set records in 2015 for revenue, adjusted EBITDA, and free cash flow. We are investing in new marketing capabilities, our connected vehicle business, new satellites, a next generation wideband chipset and, most importantly, our world-class and exclusive content. We expect that these investments, together with our long-standing focus on execution, will help us continue our long history of strong, profitable growth” said Jim Meyer, Chief Executive Officer, SiriusXM.

 

“SiriusXM’s strong, resilient business model and ability to deploy capital to benefit our stockholders present a compelling investment opportunity. Our content bundle of commercial-free music channels, live sports events, expanded comedy and entertainment programming remains a unique value in audio entertainment. And the development and deployment of our next-generation SXM17 entertainment platform and telematics services in connected vehicles position us well to continue our enviable place in the dashboard,” added Meyer.

 

FULL-YEAR 2015 HIGHLIGHTS

 

·Subscriber Growth Continues. SiriusXM added 2,283,000 net new subscribers in 2015, the highest growth in net subscribers since 2007, before Sirius and XM merged. The growth in net new subscribers in 2015 represents a 30% increase from the 1,752,000 net new subscribers added in 2014. Self-pay net subscriber additions were 1,765,000 in 2015, approximately 23% higher than in 2014. Total paid subscribers
 
climbed 8% in 2015 to approximately 29.6 million, and self-pay subscribers also increased 8% in 2015 to 24.3 million, both record highs.
·Full-year Adjusted EBITDA Rose 13% to a Record High. Adjusted EBITDA of $1.66 billion in 2015 was the highest in the company’s history, an increase of 13% over the $1.47 billion reported in 2014. The company’s adjusted EBITDA margin was also a record high of 36%, an increase from 35% in 2014.
·Free Cash Flow Per Diluted Share Increased 23%. Free cash flow of $1.32 billion in 2015 was up 14% from $1.16 billion in 2014. With increased cash flow and a 7% lower average diluted share count from the company’s share repurchase program, free cash flow per diluted share climbed 23% to 24.2 cents in 2015, up from 19.7 cents in 2014.

 

“During the fourth quarter, we spent $369 million to repurchase 92 million of our shares. In January, as our stock fell alongside the worldwide market declines, we accelerated our repurchases to nearly $200 million, repurchasing an additional 52 million shares. Our stock repurchase plan has now delivered $6.5 billion into the hands of our stockholders in just three years. We continue to maintain modest leverage of just 3.3 times adjusted EBITDA, and with no near term maturities and growing free cash flow, we have ample options on how we deploy our capital going forward,” remarked David Frear, Chief Financial Officer, SiriusXM.

 

2016 GUIDANCE

 

Our full-year 2016 guidance for continued growth in net subscribers, revenue, adjusted EBITDA, and free cash flow, originally issued on January 5, 2016, is as follows:

 

·Net subscriber additions of approximately 1.4 million,
·Revenue of approximately $4.9 billion,
·Adjusted EBITDA of approximately $1.78 billion, and
·Free cash flow of approximately $1.4 billion.
 

FOURTH QUARTER AND FULL-YEAR 2015 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)  2015   2014   2015   2014 
   (Unaudited)   (Unaudited)         
Revenue:                    
Subscriber revenue  $998,775   $922,192   $3,824,793   $3,554,302 
Advertising revenue   33,449    27,970    122,292    100,982 
Equipment revenue   30,944    29,938    110,923    104,661 
Other revenue   132,978    110,852    512,050    421,150 
Total revenue   1,196,146    1,090,952    4,570,058    4,181,095 
Operating expenses:                    
Cost of services:                    
Revenue share and royalties   251,717    210,089    1,034,832    810,028 
Programming and content   76,868    77,953    293,091    297,313 
Customer service and billing   99,387    96,411    377,908    370,585 
Satellite and transmission   28,848    21,567    94,609    86,013 
Cost of equipment   13,703    15,078    42,724    44,397 
Subscriber acquisition costs   140,826    126,257    532,599    493,464 
Sales and marketing   98,411    98,488    354,189    336,480 
Engineering, design and development   17,223    15,107    64,403    62,784 
General and administrative   105,607    69,943    324,801    293,938 
Depreciation and amortization   69,687    66,402    272,214    266,423 
Total operating expenses   902,277    797,295    3,391,370    3,061,425 
Income from operations   293,869    293,657    1,178,688    1,119,670 
Other income (expense):                    
Interest expense, net of amounts capitalized   (77,191)   (71,981)   (299,103)   (269,010)
Loss on change in value of derivatives               (34,485)
Other income   3,302    6,377    12,379    14,611 
Total other expense   (73,889)   (65,604)   (286,724)   (288,884)
Income before income taxes   219,980    228,053    891,964    830,786 
Income tax expense   (85,347)   (84,931)   (382,240)   (337,545)
Net income  $134,633   $143,122   $509,724   $493,241 
Foreign currency translation adjustment, net of tax       (114)   (100)   (94)
Total comprehensive income  $134,633   $143,008   $509,624   $493,147 
Net income per common share:                    
Basic  $0.03   $0.03   $0.09   $0.09 
Diluted  $0.03   $0.03   $0.09   $0.08 
Weighted average common shares outstanding:                    
Basic   5,195,673    5,577,325    5,375,707    5,788,944 
Diluted   5,247,514    5,643,839    5,435,166    5,862,020 
 

SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

 

   As of December 31, 
   2015   2014 
(in thousands, except per share data)        
ASSETS          
Current assets:          
Cash and cash equivalents  $111,838   $147,724 
Receivables, net   234,782    220,579 
Inventory, net   22,295    19,397 
Related party current assets   5,941    4,344 
Deferred tax assets       1,038,603 
Prepaid expenses and other current assets   187,033    119,099 
Total current assets   561,889    1,549,746 
Property and equipment, net   1,415,401    1,510,112 
Long-term restricted investments   9,888    5,922 
Intangible assets, net   2,593,346    2,645,046 
Goodwill   2,205,107    2,205,107 
Related party long-term assets       3,000 
Deferred tax assets   1,115,731    437,736 
Other long-term assets   145,300    12,396 
Total assets  $8,046,662   $8,369,065 
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY          
Current liabilities:          
Accounts payable and accrued expenses  $625,313   $587,755 
Accrued interest   91,655    80,440 
Current portion of deferred revenue   1,771,915    1,632,381 
Current portion of deferred credit on executory contracts       1,394 
Current maturities of long-term debt   4,764    7,482 
Related party current liabilities   2,840    4,340 
Total current liabilities   2,496,487    2,313,792 
Deferred revenue   157,609    151,901 
Long-term debt   5,443,614    4,487,419 
Related party long-term liabilities   10,795    13,635 
Deferred tax liabilties   6,681     
Other long-term liabilities   97,967    92,481 
Total liabilities   8,213,153    7,059,228 
Stockholders’ (deficit) equity:          
Preferred stock, undesignated, par value $0.001 (liquidation preference of $0.001 per share); 50,000 shares authorized and 0 shares issued and outstanding at December 31, 2015 and December 31, 2014, respectively        
Common stock, par value $0.001; 9,000,000 shares authorized; 5,153,451 and 5,653,529 shares issued; 5,147,647 and 5,646,119 outstanding at December 31, 2015 and December 31, 2014, respectively   5,153    5,653 
Accumulated other comprehensive loss, net of tax   (502)   (402)
Additional paid-in capital   4,783,795    6,771,554 
Treasury stock, at cost; 5,804 and 7,410 shares of common stock at December 31, 2015 and December 31, 2014, respectively   (23,727)   (26,034)
Accumulated deficit   (4,931,210)   (5,440,934)
Total stockholders’ (deficit) equity   (166,491)   1,309,837 
Total liabilities and stockholders’ (deficit) equity  $8,046,662   $8,369,065 
 

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

 

   For the Twelve Months Ended December 31, 
(in thousands)  2015   2014 
Cash flows from operating activities:          
Net income  $509,724   $493,241 
Adjustments to reconcile net income to net cash provided by operating activities:          
Depreciation and amortization   272,214    266,423 
Non-cash interest expense, net of amortization of premium   7,872    21,039 
Provision for doubtful accounts   47,237    44,961 
Amortization of deferred income related to equity method investment   (2,776)   (2,776)
Gain on unconsolidated entity investments, net       (5,547)
Dividend received from unconsolidated entity investment   14,788    17,019 
Loss on disposal of assets   7,384     
Loss on change in value of derivatives       34,485 
Share-based payment expense   84,310    78,212 
Deferred income taxes   365,499    327,461 
Other non-cash purchase price adjustments   (1,394)   (3,781)
Changes in operating assets and liabilities:          
Receivables   (61,440)   (72,628)
Inventory   (2,898)   (5,534)
Related party, net   (14,953)   (4,303)
Prepaid expenses and other current assets   (67,204)   (1,195)
Other long-term assets   (130,741)   3,393 
Accounts payable and accrued expenses   52,696    (17,191)
Accrued interest   11,215    38,355 
Deferred revenue   145,242    48,645 
Other long-term liabilities   7,276    (7,035)
Net cash provided by operating activities   1,244,051    1,253,244 
Cash flows from investing activities:          
Additions to property and equipment   (134,892)   (121,646)
Purchases of restricted and other investments   (3,966)    
Acquisition of business, net of cash acquired       1,144 
Return of capital from investment in unconsolidated entity       24,178 
Net cash used in investing activities   (138,858)   (96,324)
Cash flows from financing activities:          
Proceeds from exercise of stock options   260    331 
Taxes paid in lieu of shares issued for stock-based compensation   (54,539)   (37,318)
Proceeds from long-term borrowings and revolving credit facility, net of costs   1,728,571    2,406,205 
Repayment of long-term borrowings and revolving credit facility   (797,117)   (1,016,420)
Common stock repurchased and retired   (2,018,254)   (2,496,799)
Net cash used in financing activities   (1,141,079)   (1,144,001)
Net (decrease) increase in cash and cash equivalents   (35,886)   12,919 
Cash and cash equivalents at beginning of period   147,724    134,805 
Cash and cash equivalents at end of period  $111,838   $147,724 

 

Key Operating Metrics

 

The following table contains our key operating metrics based on our adjusted results of operations for the three and twelve months ended December 31, 2015 and 2014, respectively. Subscribers and subscription related revenues and expenses associated with our connected vehicle services are not included in our subscriber count or subscriber-based operating metrics:

 

   Unaudited 
   For the Three Months Ended December 31,   For the Twelve Months Ended December 31, 
(in thousands, except per subscriber and per installation amounts)  2015   2014   2015   2014 
Self-pay subscribers   24,288    22,523    24,288    22,523 
Paid promotional subscribers   5,306    4,788    5,306    4,788 
Ending subscribers   29,594    27,311    29,594    27,311 
                     
Self-pay subscribers   472    508    1,765    1,441 
Paid promotional subscribers   162    69    517    311 
Net additions (a)   634    577    2,283    1,752 
                     
Daily weighted average number of subscribers   29,238    27,022    28,337    26,284 
                     
Average self-pay monthly churn   1.9%   1.8%   1.8%   1.9%
                     
New vehicle consumer conversion rate   39%   40%   40%   41%
                     
ARPU  $12.75   $12.49   $12.53   $12.38 
SAC, per installation  $33   $33   $33   $34 
Customer service and billing expenses, per average subscriber  $1.04   $1.07   $1.01   $1.07 
Free cash flow  $299,148   $330,674   $1,315,193   $1,155,776 
Adjusted EBITDA  $396,235   $381,306   $1,657,617   $1,467,775 

(a) Note: Amounts may not sum as a result of rounding.

 

Glossary

 

Adjusted EBITDA EBITDA is defined as net income before interest expense, net of amounts capitalized; income tax expense and depreciation and amortization. We adjust EBITDA to exclude the impact of other income, loss on disposal of assets, 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 on-going core operating results period over period, (ii) base our internal budgets and (iii) compensate management. As such, 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, (iii) share-based payment expense and (iv) other significant operating expense (income) that do not relate to the on-going performance of our business. 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 believe the exclusion of share-based payment expense and loss on disposal of assets is useful as they are not directly related to the operational conditions of our business. We also believe the exclusion of settlements related only to the historical use of pre-1972 sound recordings is useful as it does not represent an expense incurred as part of normal operations for the period.

 

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:

 

   Unaudited 
   For the Three Months Ended December 31,   For the Twelve Months Ended December 31, 
(in thousands)  2015   2014   2015   2014 
                     
Net income (GAAP):  $134,633   $143,122   $509,724   $493,241 
Add back items excluded from Adjusted EBITDA:                    
Purchase price accounting adjustments:                    
Revenues   1,813    1,813    7,251    7,251 
Operating expenses       (946)   (1,394)   (3,781)
Pre-1972 sound recordings historical legal settlements (GAAP)   1,506        109,164     
Loss on disposal of assets (GAAP)   7,384        7,384     
Loss on change in value of derivatives (GAAP)               34,485 
Share-based payment expense (GAAP)   21,976    20,380    84,310    78,212 
Depreciation and amortization (GAAP)   69,687    66,402    272,214    266,423 
Interest expense, net of amounts capitalized (GAAP)   77,191    71,981    299,103    269,010 
Other income (GAAP)   (3,302)   (6,377)   (12,379)   (14,611)
Income tax expense (GAAP)   85,347    84,931    382,240    337,545 
Adjusted EBITDA  $396,235   $381,306   $1,657,617   $1,467,775 

 

Adjusted Net Income and Adjusted Earnings Per Share - We define these Non-GAAP financial measures as our actual net income adjusted to exclude the impact of certain purchase price accounting adjustments, the pre-1972 sound recordings legal settlements, the loss on disposal of assets, and the loss on change in value of derivatives, net of income tax expense. Adjusted earnings per share is derived from adjusted net income divided by our weighted average common shares outstanding. The following table reconciles our actual income before

 

income taxes to our adjusted net income for the three and twelve months ended December 31, 2015 and 2014:

 

   Unaudited  
   For the Three Months Ended
December 31,
   For the Twelve Months Ended
December 31,
 
(in thousands, except per share data)  2015    2014    2015    2014  
                     
Income before income taxes (GAAP):  $219,980   $228,053   $891,964   $830,786 
Add back items excluded from adjusted net income:                    
Purchase price accounting adjustments:                    
Revenues   1,813    1,813    7,251    7,251 
Operating expenses       (946)   (1,394)   (3,781)
Pre-1972 sound recordings historical legal settlements (GAAP)   1,506        109,164     
Loss on disposal of assets (GAAP)   7,384        7,384     
Loss on change in value of derivatives (GAAP)               34,485 
Adjusted income before income taxes  $230,683   $228,920   $1,014,369   $868,741 
Allocable income tax expense   (89,500)   (85,254)   (434,703)   (352,955)
Adjusted net income  $141,183   $143,666   $579,666   $515,786 
Adjusted net income per common share:                    
Basic  $0.03   $0.03   $0.11   $0.09 
Diluted  $0.03   $0.03   $0.11   $0.09 
Weighted average common shares outstanding:                    
Basic   5,195,673    5,577,325    5,375,707    5,788,944 
Diluted   5,247,514    5,643,839    5,435,166    5,862,020 
 

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, 2015 and 2014:

 

   Unaudited For the Three Months Ended December 31, 2015  
(in thousands)  As Reported    Purchase Price
Accounting
Adjustments
   Allocation of
Share-based
Payment Expense
   Adjusted  
                     
Revenue:                    
Subscriber revenue  $998,775   $   $   $998,775 
Advertising revenue   33,449            33,449 
Equipment revenue   30,944            30,944 
Other revenue   132,978    1,813        134,791 
Total revenue  $1,196,146   $1,813   $   $1,197,959 
Operating expenses                    
Cost of services:                    
Revenue share and royalties  $251,717   $   $   $251,717 
Programming and content   76,868        (3,080)   73,788 
Customer service and billing   99,387        (818)   98,569 
Satellite and transmission   28,848        (991)   27,857 
Cost of equipment   13,703            13,703 
Subscriber acquisition costs   140,826            140,826 
Sales and marketing   98,411        (4,929)   93,482 
Engineering, design and development   17,223        (2,407)   14,816 
General and administrative   105,607        (9,751)   95,856 
Depreciation and amortization (a)   69,687            69,687 
Share-based payment expense           21,976    21,976 
Total operating expenses  $902,277   $   $   $902,277 

 

(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, 2015 was $8,000.

 
   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 Twelve Months Ended December 31, 2015  
(in thousands)  As Reported    Purchase Price
Accounting
Adjustments
   Allocation of
Share-based
Payment Expense
   Adjusted  
                     
Revenue:                    
Subscriber revenue  $3,824,793   $   $   $3,824,793 
Advertising revenue   122,292            122,292 
Equipment revenue   110,923            110,923 
Other revenue   512,050    7,251        519,301 
Total revenue  $4,570,058   $7,251   $   $4,577,309 
Operating expenses                    
Cost of services:                    
Revenue share and royalties  $1,034,832   $   $   $1,034,832 
Programming and content   293,091    1,394    (10,325)   284,160 
Customer service and billing   377,908        (2,982)   374,926 
Satellite and transmission   94,609        (4,147)   90,462 
Cost of equipment   42,724            42,724 
Subscriber acquisition costs   532,599            532,599 
Sales and marketing   354,189        (17,985)   336,204 
Engineering, design and development   64,403        (9,470)   54,933 
General and administrative   324,801        (39,401)   285,400 
Depreciation and amortization (a)   272,214            272,214 
Share-based payment expense           84,310    84,310 
Total operating expenses  $3,391,370   $1,394   $   $3,392,764 

 

(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 twelve months ended December 31, 2015 was $35,000.

 
   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 twelve months ended December 31, 2014 was $39,000.

 

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, share-based payment expense, the pre-1972 sound recordings historical legal settlements, and the loss on disposal of assets. The following table reconciles our actual operating expenses to our adjusted cash operating expenses for the three and twelve months ended December 31, 2015 and 2014:

 

   Unaudited 
   For the Three Months Ended
December 31,
   For the Twelve Months Ended
December 31,
 
(in thousands)  2015   2014   2015   2014 
Operating expenses (GAAP):  $902,277   $797,295   $3,391,370   $3,061,425 
Items excluded from adjusted cash operating expenses:                    
Purchase price accounting adjustments       946    1,394    3,781 
Pre-1972 sound recordings historical legal settlements (GAAP)   (1,506)       (109,164)    
Loss on disposal of assets (GAAP)   (7,384)       (7,384)    
Share-based payment expense (GAAP)   (21,976)   (20,380)   (84,310)   (78,212)
Depreciation and amortization (GAAP)   (69,687)   (66,402)   (272,214)   (266,423)
Adjusted cash operating expenses  $801,724   $711,459   $2,919,692   $2,720,571 

 

ARPU - is derived from total earned subscriber revenue, advertising revenue and other subscription-related revenue, excluding revenue associated with our connected vehicle business, 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:

 
   Unaudited 
   For the Three Months Ended
December 31,
   For the Twelve Months Ended
December 31,
 
(in thousands, except per subscriber amounts)  2015   2014   2015   2014 
Subscriber revenue, excluding connected vehicle (GAAP)  $973,347   $897,308   $3,726,340   $3,466,050 
Add: advertising revenue (GAAP)   33,449    27,970    122,292    100,982 
Add: other subscription-related revenue (GAAP)   111,207    87,270    410,644    336,408 
   $1,118,003   $1,012,548   $4,259,276   $3,903,440 
                     
Daily weighted average number of subscribers   29,238    27,022    28,337    26,284 
                     
ARPU  $12.75   $12.49   $12.53   $12.38 

 

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:

 

   Unaudited 
   For the Three Months Ended
December 31,
   For the Twelve Months Ended
December 31,
 
(in thousands, except per subscriber amounts)  2015   2014   2015   2014 
Customer service and billing expenses, excluding connected vehicle (GAAP)  $91,686   $87,417   $346,789   $340,094 
Less: share-based payment expense (GAAP)   (818)   (748)   (2,982)   (2,780)
   $90,868   $86,669   $343,807   $337,314 
                     
Daily weighted average number of subscribers   29,238    27,022    28,337    26,284 
                     
Customer service and billing expenses, per average subscriber  $1.04   $1.07   $1.01   $1.07 

 

Free cash flow and free cash flow per diluted share - are derived from cash flow provided by operating activities, net of additions to property and equipment, restricted and other investment activity, and the return of capital from investment in unconsolidated entity, excluding the $210,000 pre-1972 sound recordings legal settlement payment. The calculation for free cash flow and free cash flow per diluted share are as follows:

 
   Unaudited 
   For the Three Months Ended
December 31,
   For the Twelve Months Ended
December 31,
 
(in thousands, except per share data)  2015   2014   2015   2014 
Cash Flow information                    
Net cash provided by operating activities  $343,097   $365,076   $1,244,051   $1,253,244 
Net cash used in investing activities  $(43,949)  $(34,402)  $(138,858)  $(96,324)
Net cash used in financing activities  $(339,855)  $(286,535)  $(1,141,079)  $(1,144,001)
Free Cash Flow                    
Net cash provided by operating activities  $343,097   $365,076   $1,244,051   $1,253,244 
Additions to property and equipment   (43,949)   (34,402)   (134,892)   (121,646)
Purchases of restricted and other investments           (3,966)    
Return of capital from investment in unconsolidated entity               24,178 
Pre-1972 sound recordings legal settlement           210,000     
Free cash flow  $299,148   $330,674   $1,315,193   $1,155,776 
                     
Diluted weighted average common shares outstanding   5,247,514    5,643,839    5,435,166    5,862,020 
                     
Free cash flow per diluted share  $0.06   $0.06   $0.24   $0.20 

 

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, divided by the number of satellite radio installations in new vehicles and shipments of aftermarket radios for the period. SAC, per installation, is calculated as follows:

 

   Unaudited 
   For the Three Months Ended
December 31,
   For the Twelve Months Ended
December 31,
 
(in thousands, except per installation amounts)  2015   2014   2015   2014 
Subscriber acquisition costs (GAAP)  $140,826   $126,257   $532,599   $493,464 
Less: margin from direct sales of radios and accessories (GAAP)   (17,241)   (14,860)   (68,199)   (60,264)
   $123,585   $111,397   $464,400   $433,200 
                     
Installations   3,736    3,391    14,041    12,788 
                     
SAC, per installation  $33   $33   $33   $34 

 

###

 

About SiriusXM

 

Sirius XM Holdings Inc. (NASDAQ: SIRI) is the world’s largest radio broadcaster measured by revenue and has 29.6 million subscribers. SiriusXM creates and broadcasts commercial-free music; premier sports talk and live events; comedy; news; exclusive talk and entertainment, and a wide-range of Latin music, sports and talk programming. SiriusXM is available in vehicles

 

from every major car company in the U.S. and on smartphones and other connected devices as well as online at siriusxm.com. SiriusXM radios and accessories are available from retailers nationwide and online at SiriusXM. SiriusXM also provides premium traffic, weather, data and information services for subscribers in cars, trucks, and RVs through SiriusXM Traffic™, SiriusXM Travel Link, NavTraffic®, NavWeather™. SiriusXM delivers critical weather, data and information services to aircraft and boats through SiriusXM Aviation, SiriusXM Marine™, Sirius Marine Weather, XMWX Aviation™, XMWX Weather, and XMWX Marine™. In addition, SiriusXM Music for Business provides commercial-free music to a variety of businesses. SiriusXM holds a minority interest in SiriusXM Canada which has more than 2.7 million subscribers. SiriusXM is also a leading provider of connected vehicles services to major automakers, giving customers access to a suite of safety, security, and convenience services including automatic crash notification, stolen vehicle recovery assistance, enhanced roadside assistance and turn-by-turn navigation.

 

To download SiriusXM logos and artwork, visit http://www.siriusxm.com/LogosAndPhotos.

 

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 service providers; our ability to attract and retain subscribers, which is uncertain; our dependence upon the auto industry; general economic conditions; changes in consumer protection laws and their enforcement; the security of the personal information about our customers; other existing or future government laws and regulations could harm our business; failure of our satellites would significantly damage our business; the interruption or failure of our information technology and communications systems; 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 or other strategic initiatives; rapid technological and industry changes; failure of third parties to perform; failure to comply with FCC requirements; modifications to our business plans; our indebtedness; and our principal stockholder has significant influence over our management and over actions requiring stockholder approval and its interests may differ from interests of other holders of our common stock. 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, 2014, 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.

 

Source: SiriusXM

 

Contact for SiriusXM:

 

Hooper Stevens

212-901-6718

Hooper.stevens@siriusxm.com

 

Chris Leal

212-584-5236

Chris.leal@siriusxm.com

 

The following information was filed by Sirius Xm Holdings Inc. (SIRI) on Tuesday, February 2, 2016 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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