SIRIUS Satellite Radio Reports Record Subscriber Growth and Revenue for Fourth Quarter and Full-Year 2005

SIRIUS Satellite Radio Reports Record Subscriber Growth and Revenue for Fourth Quarter and Full-Year 2005

- Subscribers Increased 190% to Over 3.3 Million at Year-End 2005 - Satellite Radio Market Share Leader For Fourth Quarter 2005 - 2005 Revenue Grew 262% to Over $242 Million - More Than 6 Million Subscribers Expected by Year-End 2006 - Company Provides Additional 2006 Full-Year Guidance and 2010 Outlook

NEW YORK, Feb. 17 /PRNewswire-FirstCall/ -- SIRIUS Satellite Radio (NASDAQ:SIRI) today announced record fourth quarter and full-year 2005 financial and operating results, driven by better-than-expected subscriber growth across its distribution channels.

(Logo: http://www.newscom.com/cgi-bin/prnh/19991118/NYTH125 )

SIRIUS ended 2005 with 3,316,560 subscribers, reflecting a 190% increase in total subscribers for the year and record net subscriber additions of 2,173,302. For the fourth quarter, the company added 1,142,640 net subscribers, making SIRIUS the market share leader in terms of net satellite radio subscriber additions for the quarter. This was the best quarterly gain in the company's history, and a 138% increase over net subscriber additions in the year-ago quarter. SIRIUS' market share of satellite radio net subscriber additions was approximately 45% for full-year 2005 and approximately 56% for the fourth quarter.

Full-year 2005 revenue grew to $242.2 million, up 262% from $66.9 million in 2004, and ahead of guidance for the year. Average monthly churn for the fourth quarter and full-year 2005 was 1.5%, in line with guidance. Subscriber acquisition costs (SAC) per gross subscriber addition was $113 for the fourth quarter and $139 for full-year 2005, a 21% improvement over the full-year 2004 level and ahead of guidance of under $145 for 2005.

"2005 was our best year ever and a major milestone for SIRIUS, setting new records in subscribers, market share and revenue," said Mel Karmazin, CEO of SIRIUS. "We continue to be the fastest growing U.S. provider in this exciting new entertainment category, with strong growth driven by tremendous demand for our products and our programming, including the NFL, Martha Stewart and Howard Stern. In 2006, we believe this positive momentum will be further reflected in our automotive OEM channel, where we expect to more than double our subscriber base."

During 2005, SIRIUS added 1,554,108 net subscribers from its retail channel, a 123% increase from 696,028 net retail subscriber additions in 2004. The company also added 620,224 net subscribers from its automotive OEM channel, more than 241% above net automotive OEM subscriber additions of 181,646 in 2004. For the fourth quarter, SIRIUS added 900,645 net subscribers from its retail channel and 241,705 net subscribers from its automotive OEM channel.

SIRIUS reported a net loss of ($311.4) million, or ($0.23) per share, for the fourth quarter of 2005, and a net loss of ($863.0) million, or ($0.65) per share, for the full-year.

2005 Achievements

During the year, SIRIUS achieved significant operational milestones including the following:

* Satellite radio market share parity in the retail channel -- retail
market share of 55% for the full-year and 61% for the fourth quarter,
according to The NPD Group

* Rapid acceleration in OEM subscriber additions, with further
acceleration expected in 2006

* Material reduction in SAC per gross subscriber addition, with further
improvements expected in 2006 and beyond

* Long-term exclusive agreements extended with SIRIUS' automotive OEM
partners DaimlerChrysler (Chrysler and Mercedes-Benz), Ford and BMW

* Exciting new programming exclusives with Martha Stewart, Richard
Simmons, the NBA, Adam Curry's Podcast Show, Howard Stern (January
2006) and NASCAR (2007)

* Introduced the critically acclaimed SIRIUS S50, the satellite radio
industry's first wearable device with MP3/WMA capabilities

* Launched SIRIUS Music on the Sprint wireless network, a satellite radio
industry first

* Launched satellite radio service in Canada through SIRIUS' Canadian
affiliate, SIRIUS Canada Inc.

* Enhanced balance sheet and liquidity through a successful $500 million
debt offering

* Key senior management additions in marketing, advertising sales,
retail, business development and investor relations areas

Guidance

SIRIUS believes that the satellite radio industry will continue to experience strong growth in 2006, and the company expects to have over 6 million subscribers by the end of this year.

Average monthly churn is expected to be approximately 1.8% for 2006. The company expects SAC per gross subscriber addition to approach $110 for the full-year 2006 and to decline further in 2007.

SIRIUS expects to generate approximately $600 million of total revenue in 2006, and approximately $1 billion in 2007. SIRIUS expects an adjusted loss from operations of approximately $540 million in 2006.

SIRIUS ended the fourth quarter of 2005 with approximately $879 million in cash, cash equivalents and marketable securities. SIRIUS' first quarter of positive free cash flow, after capital expenditures, could be reached as early as the fourth quarter of 2006, and the company continues to expect to generate positive free cash flow for the full-year 2007.

The company expects capital expenditures to be approximately $110 million in 2006, which includes investments for new revenue generating opportunities such as telematics, video and other data services, as well as network infrastructure expansion, including payments related to the previously disclosed contract to secure a slot for a possible satellite launch prior to year-end 2010.

SIRIUS also believes that in 2010 the company will generate approximately $3 billion in revenue and approximately $1 billion in free cash flow, after capital expenditures.

Conference Call Information:

SIRIUS will hold a conference call today at 8 am ET to discuss operating and financial results. The public, members of the investment community and the press will have live access to the conference call via the company's website, http://www.sirius.com/, and on the SIRIUS service by tuning to SIRIUS Channel 125. A replay of the call will also be available on the SIRIUS website.

FOURTH QUARTER 2005 VERSUS FOURTH QUARTER 2004

For the fourth quarter of 2005, SIRIUS recognized total revenue of $80.0 million compared with $25.2 million for the fourth quarter of 2004. This increase in revenue was driven by a net increase of 2,173,302 subscribers from December 31, 2004 to December 31, 2005.

The company's adjusted loss from operations increased by $71.1 million to ($226.3) million for the fourth quarter of 2005 from ($155.2) million for the fourth quarter of 2004 (refer to the reconciliation table of GAAP loss from operations to adjusted loss from operations). This increase was driven by a 124%, or $80.2 million, increase in subscriber acquisition costs reflecting higher shipments of SIRIUS radios and chip sets and increased commissions to support a 143% increase in gross subscriber additions from 521,479 for the fourth quarter of 2004 to 1,266,674 for the fourth quarter of 2005, offset by reductions in hardware subsidy rates as the company continued to reduce manufacturing and chip set costs. The increase in subscriber acquisition costs was offset by a 199%, or $45.1 million, increase in subscriber revenue as a result of a 190% increase in the company's subscriber base.

Programming and content expenses increased by $9.2 million to $35.0 million for the fourth quarter of 2005 from $25.8 million for the fourth quarter of 2004. The increase was primarily attributable to license fees associated with new content agreements, broadcast royalties as a result of the increase in the company's subscriber base and compensation related costs for expansion of the programming lineup.

Customer service and billing expenses increased by $11.4 million to $20.0 million for the fourth quarter of 2005 from $8.6 million for the fourth quarter of 2004. The increase was primarily attributable to call center operating costs necessary to accommodate the increase in the subscriber base. Customer service and billing expenses per average subscriber per month declined 25% to $2.66 for the fourth quarter of 2005 from $3.56 for the fourth quarter of 2004.

Sales and marketing expenses increased by $12.2 million to $63.0 million for the fourth quarter of 2005 from $50.8 million for the fourth quarter of 2004. The increase was primarily attributable to higher costs associated with advertising, distribution and revenue share.

During the fourth quarter of 2005, the company also had increases in general and administrative expenses and engineering, design and development expenses. General and administrative expenses increased $3.9 million to $16.9 million for the fourth quarter of 2005 from $13.0 million for the fourth quarter of 2004 primarily as a result of overhead expansion to support the growth of the business. Engineering, design and development expenses increased $3.1 million to $11.5 million for the fourth quarter of 2005 from $8.4 million for the fourth quarter of 2004 primarily as a result of development costs for the company's next generation of products, offset by decreases in costs associated with OEM tooling and manufacturing upgrades.

For the fourth quarter of 2005, the company recorded $6.2 million for its share of SIRIUS Canada Inc.'s net loss.

SIRIUS reported a net loss of ($311.4) million, or ($0.23) per share, for the fourth quarter of 2005 compared with a net loss of ($261.9) million, or ($0.21) per share, for the fourth quarter of 2004.

YEAR ENDED DECEMBER 31, 2005 VERSUS YEAR ENDED DECEMBER 31, 2004

For the year ended December 31, 2005, SIRIUS recognized total revenue of $242.2 million compared with $66.9 million for the year ended December 31, 2004. This increase in revenue was driven by a net increase of 2,173,302 subscribers from December 31, 2004 to December 31, 2005.

The company's adjusted loss from operations increased by $111.3 million to ($567.5) million for the year ended December 31, 2005 from ($456.2) million for the year ended December 31, 2004 (refer to the reconciliation table of GAAP loss from operations to adjusted loss from operations). This increase was driven by a 101%, or $175.9 million, increase in subscriber acquisition costs reflecting higher shipments of SIRIUS radios and chip sets and increased commissions to support a 155% increase in gross subscriber additions from 986,556 for the year ended December 31, 2004 to 2,519,301 for the year ended December 31, 2005, offset by reductions in average subsidy rates as the company continued to reduce manufacturing and chip set costs. The increase in subscriber acquisition costs was offset by a 256%, or $160.7 million, increase in subscriber revenue as a result of a 190% increase in the company's subscriber base.

Programming and content expenses increased by $35.2 million to $98.6 million for the year ended December 31, 2005 from $63.4 million for the year ended December 31, 2004. The increase was primarily attributable to license fees associated with new content agreements, broadcast royalties as a result of the increase in the company's subscriber base and compensation related costs for expansion of the programming lineup.

Customer service and billing expenses increased by $24.3 million to $46.6 million for the year ended December 31, 2005 from $22.3 million for the year ended December 31, 2004. The increase was primarily attributable to call center operating costs necessary to accommodate the increase in the subscriber base. Customer care and billing expenses per average subscriber per month declined 41% to $2.10 for the year ended December 31, 2005 from $3.56 for the year ended December 31, 2004.

Sales and marketing expenses increased by $16.1 million to $170.6 million for the year ended December 31, 2005 from $154.5 million for the year ended December 31, 2004. The increase was primarily attributable to higher costs associated with advertising, distribution, residuals and revenue share. Such increases were offset in part by decreases in certain retail costs associated with sales efforts for the RadioShack rollout in 2004. Compensation related costs also increased as a result of additions to headcount to support the growth of the company.

During the year ended December 31, 2005, the company also had increases in general and administrative expenses and engineering, design and development expenses. General and administrative expenses increased $15.8 million to $59.8 million for the year ended December 31, 2005 from $44.0 million for the year ended December 31, 2004 primarily as a result of overhead expansion to support the growth of the business. Engineering, design and development expenses increased $14.2 million to $44.7 million for the year ended December 31, 2005 from $30.5 million for the year ended December 31, 2004 primarily as a result of additional personnel-related costs to support research and development efforts, costs associated with OEM tooling and manufacturing upgrades and development costs for the company's next generation of radios. Increases in engineering, design and development expenses were offset by lower chip set development costs.

Increases in operating expenses were offset by a decrease in satellite and transmission expenses of $3.3 million to $27.9 million for the year ended December 31, 2005 from $31.2 million for the year ended December 31, 2004. Such decrease was primarily a result of the company's decision not to renew its satellite insurance policy in August 2004, offset in part by an increase in personnel-related costs.

For the year ended December 31, 2005, the company recorded $6.9 million for its share of SIRIUS Canada Inc.'s net loss. In addition, the company recorded a $6.2 million loss from the redemption of its 15% Senior Secured Discount Notes due 2007 and 14 1/2% Senior Secured Notes due 2009.

SIRIUS reported a net loss of ($863.0) million, or ($0.65) per share, for the year ended December 31, 2005 compared with a net loss of ($712.2) million, or ($0.57) per share, for the year ended December 31, 2004.

(Selected financial information follows).

SIRIUS defines average monthly churn as the number of deactivated subscribers divided by average quarterly subscribers.

SIRIUS defines subscriber acquisition costs, or SAC, per gross subscriber addition as SAC and margins from the direct sale of SIRIUS radios and accessories divided by the number of gross subscriber additions for the period.

SIRIUS defines average monthly revenue per subscriber, or ARPU, as the total earned subscriber revenue and net advertising revenue divided by the daily weighted average number of subscribers for the period.

SIRIUS defines adjusted loss from operations as GAAP loss from operations before depreciation and equity granted to third parties and employees. SIRIUS believes adjusted loss from operations is useful because it represents operating expenses of the company excluding the effects of non-cash items.

Average monthly churn, SAC per gross subscriber addition, ARPU and adjusted loss from operations are not measures of financial performance under U.S. generally accepted accounting principles and are used by SIRIUS as measures of operating performance. As a result, these metrics 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 or as a substitute for measures of financial performance prepared in accordance with U.S. generally accepted accounting principles.

Sirius Satellite Radio Inc.
Subscriber Data and Metrics
(Unaudited)

As of December 31,
2005 2004
Subscribers:
Beginning subscribers 1,143,258 261,061
Net additions 2,173,302 882,197
Ending subscribers 3,316,560 1,143,258
Retail 2,465,363 911,255
OEM 823,693 203,469
Hertz 27,504 28,534

For the Three Months For the Years
Ended December 31, Ended December 31,
2005 2004 2005 2004

Gross subscriber additions 1,266,674 521,479 2,519,301 986,556
Deactivated subscribers 124,034 40,510 345,999 104,359
Average monthly churn 1.5% 1.5% 1.5% 1.6%
Subscriber acquisition
costs per gross subscriber
addition $113 $124 $139 $177
Monthly ARPU:
Average monthly subscriber
revenue per subscriber
before effects of Hertz
subscribers and mail-in
rebates $10.76 $10.57 $10.78 $10.91
Effects of Hertz subscribers 0.03 (0.05) 0.04 (0.19)
Effects of mail-in rebates (1.77) (1.16) (0.76) (0.70)
Average monthly subscriber
revenue per subscriber 9.02 9.36 10.06 10.02
Average monthly net
advertising revenue per
subscriber 0.40 0.21 0.28 0.14
ARPU $9.42 $9.57 $10.34 $10.16

Sirius Satellite Radio Inc.
Financial Highlights
(In thousands, except per share data)
(Unaudited)

For the Three Months For the Years
Ended December 31, Ended December 31,
2005 2004 2005 2004
Revenue:

Subscriber revenue,
including effects of
mail-in rebates $67,816 $22,704 $223,615 $62,881
Advertising revenue, net
of agency fees
3,037 507 6,131 906
Equipment revenue 8,971 1,885 12,271 2,898
Other revenue 180 121 228 169
Total revenue 80,004 25,217 242,245 66,854

Operating expenses:
Cost of services (excludes
depreciation shown separately
below):
Satellite and transmission 7,147 6,942 27,856 31,157
Programming and content 35,018 25,803 98,607 63,353
Customer service and billing 20,007 8,623 46,653 22,341
Cost of equipment 7,446 1,852 11,827 3,467
Sales and marketing 63,049 50,825 170,592 154,495
Subscriber acquisition costs 145,180 64,944 349,641 173,702
General and administrative 16,913 13,019 59,831 44,028
Engineering, design and
development 11,513 8,430 44,745 30,520
Depreciation 24,915 24,288 98,555 95,370
Equity granted to third
parties and employees (1) 46,196 79,065 163,078 126,725
Total operating expenses 377,384 283,791 1,071,385 745,158
Loss from operations (297,380) (258,574) (829,140) (678,304)
Other income (expense):
Interest and investment income 9,956 3,807 26,878 9,713
Interest expense (17,142) (7,151) (45,361) (41,386)
Loss from redemption of debt - - (6,214) -
Income (expense) from affiliate (6,199) - (6,938) -
Other income 7 605 89 2,016
Total other income (expense) (13,378) (2,739) (31,546) (29,657)
Loss before income taxes (310,758) (261,313) (860,686) (707,961)
Income tax expense (631) (560) (2,311) (4,201)
Net loss $(311,389) $(261,873) $(862,997) $(712,162)
Net loss per share
(basic and diluted) $(0.23) $(0.21) $(0.65) $(0.57)
Weighted average common shares
outstanding (basic and
diluted) 1,335,650 1,263,710 1,325,739 1,238,585

(1) Allocation of equity granted to third parties and employees to other
operating expenses:

Satellite and transmission $487 $1,244 $1,942 $2,041
Programming and content 4,676 15,502 19,469 23,899
Customer service and billing 144 254 549 439
Sales and marketing 11,801 26,724 42,149 48,353
Subscriber acquisition costs 18,594 26,052 49,709 33,149
General and administrative 5,978 6,462 27,724 13,877
Engineering, design and
development 4,516 2,827 21,536 4,967
Total equity granted to third
parties and employees $46,196 $79,065 $163,078 $126,725

Sirius Satellite Radio Inc.
Financial Highlights
(In thousands)
(Unaudited)

Selected balance sheet data:
As of
December 31, 2005 December 31, 2004

Cash, cash equivalents and
marketable securities $879,257 $759,168
Restricted investments 107,615 97,321
Working capital 404,481 541,526
Total assets 2,085,362 1,957,613
Long-term debt 1,084,437 656,274
Total liabilities 1,760,394 956,980
Accumulated deficit (2,728,853) (1,865,856)
Stockholders' equity 324,968 1,000,633

The following table reconciles GAAP loss from operations, as reported, to adjusted loss from operations:

For the Three Months For the Years
Ended December 31, Ended December 31,
2005 2004 2005 2004

GAAP loss from operations,
as reported $(297,380) $(258,574) $(829,140) $(678,304)
Depreciation 24,915 24,288 98,555 95,370
Equity granted to third
parties and employees 46,196 79,065 163,078 126,725
Adjusted loss from operations $(226,269) $(155,221) $(567,507) $(456,209)

Sirius Satellite Radio Inc.
Financial Highlights
(In thousands)
(Unaudited)

For the Three Months For the Years
Ended December 31, Ended December 31,
2005 2004 2005 2004

Cash flows from operating
activities:
Net loss $(311,389) $(261,873) $(862,997) $(712,162)
Adjustments to reconcile
net loss to net cash used
in operating activities:
Depreciation 24,915 24,288 98,555 95,370
Non-cash interest expense 804 744 3,169 21,912
Provision for doubtful
accounts 1,017 627 4,311 1,648
Non-cash income (expense)
from affiliate 2,777 - 3,192 -
Non-cash loss from
redemption of debt - - 712 -
Loss on disposal of assets 742 51 1,028 70
Equity granted to third
parties and employees 46,196 79,065 163,078 126,725
Deferred income taxes 631 560 2,311 4,201
Changes in operating assets
and liabilities:

Marketable securities - (200) 16 (292)
Accounts receivable (18,984) (4,649) (28,440) (7,684)
Inventory (916) 5,503 (6,329) (1,850)
Prepaid expenses and other
current assets (14,517) (7,134) (29,129) (5,636)
Other long-term assets 3,760 (41,157) 6,476 (44,563)
Accounts payable and
accrued expenses 108,721 63,790 145,052 108,511
Accrued interest 11,472 841 17,813 4,689
Deferred revenue 129,142 45,235 210,947 78,541
Other long-term liabilities 17 (4,634) (3,505) (3,943)
Net cash used in operating
activities (15,612) (98,943) (273,740) (334,463)
Cash flows from investing
activities:
Additions to property and
equipment (31,939) (6,273) (49,888) (28,589)
Sales of property and
equipment 7 206 72 443
Purchases of restricted
investments (15,000) - (21,291) (89,706)
Release of restricted
investments - 398 10,997 -
Purchases of available-for-sale
securities (20,200) - (148,900) -
Sales of available-for-sale
securities 26,750 - 31,850 -
Maturities of available-for-sale
securities 250 - 5,085 25,000
Net cash used in investing
activities (40,132) (5,669) (172,075) (92,852
Cash flows from financing
activities:
Proceeds from issuance of
common stock, net - 96,025 - 96,025
Proceeds from issuance of
long-term debt, net - 224,813 493,005 518,413
Redemption of debt - - (57,609) -
Proceeds from exercise of
stock options 7,418 20,047 18,543 26,051
Proceeds from exercise of
warrants - - - 19,850
Other - (13) (8) (112)
Net cash provided by
financing activities 7,418 340,872 453,931 660,227
Net (decrease) increase in cash
and cash equivalents (48,326) 236,260 8,116 232,912
Cash and cash equivalents at
the beginning of period 810,333 517,631 753,891 520,979
Cash and cash equivalents at
the end of period $762,007 $753,891 $762,007 $753,891

About SIRIUS

SIRIUS delivers more than 125 channels of the best commercial-free music, compelling talk shows, news and information, and the most extensive sports programming to listeners across the country in digital quality sound. SIRIUS offers 68 channels of 100% commercial-free music, and features over 55 channels of sports, news, talk, entertainment, traffic and weather for a monthly subscription fee of only $12.95. SIRIUS is the Official Satellite Radio Partner of the NFL, NBA and NHL and broadcasts live play-by-play games of the NFL, NBA and NHL.

SIRIUS products for the car, truck, home, RV and boat are distributed by Alpine, Audiovox, Brix Group, Clarion, Delphi, Directed Electronics, Eclipse, Jensen, JVC, Kenwood, Magnadyne, Monster Cable, Pioneer, Russound, Tivoli and XACT Communications. Available in more than 25,000 retail locations, SIRIUS radios can be purchased at major retailers including Best Buy, Circuit City, Crutchfield, Costco, Target, Wal-Mart, Sam's Club, RadioShack and at shop.sirius.com.

SIRIUS radios are currently offered in vehicles from Audi, BMW, Chrysler, Dodge, Ford, Infiniti, Jaguar, Jeep(R), Land Rover, Lexus, Lincoln-Mercury, Mazda, Mercedes-Benz, MINI, Nissan, Scion, Toyota, Porsche, Volkswagen and Volvo. Hertz currently offers SIRIUS at major locations around the country.

Click on http://www.sirius.com/ to listen to SIRIUS live, or to find a SIRIUS retailer or car dealer in your area.

Any statements that express, or involve discussions as to, expectations, beliefs, plans, objectives, assumptions, future events or performance with respect to SIRIUS Satellite Radio Inc. are not historical facts and may be forward-looking and, accordingly, such statements involve estimates, assumptions and uncertainties which could cause actual results to differ materially from those expressed in any forward-looking statements. Accordingly, any such statements are qualified in their entirety by reference to the factors discussed in our Annual Report on Form 10-K for the year ended December 31, 2004 filed with the Securities and Exchange Commission. Among the key factors that have a direct bearing on our operational results are: our dependence upon third parties, including manufacturers of SIRIUS radios, retailers, automakers and programming partners, our competitive position and any events which affect the useful life of our satellites.

E-SIRI

Contacts:

Media

Jim Collins
SIRIUS
212-901-6422
jcollins@siriusradio.com

Analysts

Paul Blalock
SIRIUS
212-584-5174
pblalock@siriusradio.com

Michelle McKinnon
SIRIUS
212-584-5285
mmckinnon@siriusradio.com

Photo: NewsCom: http://www.newscom.com/cgi-bin/prnh/19991118/NYTH125
AP Archive: http://photoarchive.ap.org/
PRN Photo Desk, photodesk@prnewswire.com
Source: SIRIUS Satellite Radio

CONTACT: Media - Jim Collins, +1-212-901-6422, jcollins@siriusradio.com,
or Analysts - Paul Blalock, +1-212-584-5174, pblalock@siriusradio.com, or
Michelle McKinnon, +1-212-584-5285, mmckinnon@siriusradio.com, all of SIRIUS
Satellite Radio

Web site: http://www.sirius.com/

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