XM Satellite Radio Holdings Inc. Announces Fourth Quarter and Full Year 2007 Results

XM Satellite Radio Holdings Inc. Announces Fourth Quarter and Full Year 2007 Results

Fourth Quarter and Full Year Net Loss Narrows;

2007 Revenue Increases 22% to $ 1.1 Billion;

XM Surpasses 9 Million Subscribers in 2007;

XM-Equipped New Car Production Increases 64% in 2007

WASHINGTON, Feb. 28 /PRNewswire-FirstCall/ -- XM Satellite Radio Holdings Inc. (NASDAQ:XMSR) today reported financial and operating results for the fourth quarter and full year ended December 31, 2007. XM announced that 2007 revenue increased year over year by 22 percent to $1.1 billion. XM added 1.4 million net new subscribers ending 2007 with more than 9 million subscribers, an 18 percent increase over the prior year. In 2007, XM's automotive partners increased production of XM-equipped vehicles by 64 percent over 2006, with 3.5 million installs and more than a million in the fourth quarter alone.

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"XM substantially improved its business operations in 2007 as we grew our subscriber base and revenues and narrowed our loss, positioning us as a stronger and more focused company better positioned to meet the competitive challenges of the future," said Nate Davis, president and chief executive officer, XM Satellite Radio. "XM has doubled its revenues in the last two years and our investment and robust performance in the new car market establishes a clear path for sustained future growth."

"Our pending merger will benefit shareholders and offer consumers more programming choices and lower prices," Davis continued. "We are pleased with the strong support our merger has received from a broad range of organizations, and we look forward to regulatory approval in the near future."

Fourth Quarter and Full-Year Financial Results

For the fourth quarter of 2007, XM reported total revenue of $308 million, an increase of 20 percent over the $257 million total revenue reported in fourth quarter of 2006. XM's full year 2007 total revenue was $1.1 billion, an increase of 22 percent over the $933 million total revenue recorded in 2006.

Net loss for the fourth quarter of 2007 narrowed by $18 million over the prior year to ($239) million compared to a net loss for the fourth quarter 2006 of ($257) million. Full year net loss improved by $37 million over the prior year to ($682) million compared to a full year 2006 net loss of ($719) million.

Net loss per share for the fourth quarter was 78 cents, which included a total of 25 cents for certain merger and settlement related charges.

Full year 2007 adjusted operating loss of $238 million included merger and settlement charges of $86 million which were excluded from our guidance range of $170 million to $180 million loss. Fourth Quarter adjusted operating loss of $117 million included $58 million of the aforementioned $86 million of merger and settlement charges.

Industry-leading Programming

2007 was another exceptional year for XM programming. XM kicked off its third season of Major League Baseball and its first season of college sports from all six major conferences: the ACC, BIG EAST, Big Ten, Big 12, Pac-10, and SEC. The company introduced new channels, including XMX, an innovative new channel featuring XM's most popular and critically-acclaimed original music shows all in one place. In 2007, Bob Dylan launched the second season of his award-winning show, "Theme Time Radio Hour," and XM recently marked the expansion of exclusive programming on the popular Oprah & Friends channel. In anticipation of the presidential primary season, XM debuted the nation's first radio channel dedicated to a presidential campaign, POTUS '08, which was named "one of the ten most important voices to listen to" this election year by Best Life magazine.

XM's Automotive Partners Continue to Expand Availability of XM-Equipped Vehicles - First Toyota Brands with Factory-Equipped XM Now At Dealerships

In 2007, XM's automotive partners produced 3.5 million XM-equipped vehicles. The fourth quarter of 2007 saw XM's automotive partners continue to announce and introduce more vehicle models with factory-equipped XM and the real-time traffic service XM NavTraffic. The all-new 2009 Toyota Corolla and Matrix are now available with factory-installed XM Radio. In addition, XM NavTraffic will be available on Corolla and Matrix this spring. General Motors expanded XM as standard equipment on all 2008 Buick, HUMMER, and Saab models. Hyundai announced that the 2008 Tiburon, Accent, and Tuscon models with standard XM will be available in the spring of 2008. Factory-equipped XM and XM NavTraffic options for the 2009 Nissan Murano are available now, and Kawasaki unveiled its first motorcycles with satellite radio in partnership with XM.

XM Podcasts Debut on XMRadio.com and Apple's iTunes Store

In December 2007, XM introduced free podcasts of select XM programs made available on XMRadio.com and Apple's iTunes Store. Two of XM's podcasts ranked among iTunes Top 10 Podcasts. For the first time, consumers can download a variety of XM talk, music, comedy, and sports podcasts for portable media players and personal computers. These podcasts let consumers experience a small, but compelling, sample of XM's programming diversity.

XM Radios Take Top Honors in 2007 Year-End Reviews

XM's newest radio, the XpressRC plug-and-play receiver, took top honors in 2007 year-end product reviews by WIRED, Popular Science, and Men's Health magazines. In addition, XM received four Innovations Awards for outstanding products at the 2008 Consumer Electronics Show.

Webcast and Conference Call Information

XM will host an earnings conference call to discuss its full year and fourth quarter 2007 results today, February 28, at 10:00 AM Eastern Time. Prior to the call, you can access XM Radio's full year and fourth quarter 2007 results on the Company's website at http://www.xmradio.com/. To listen to the conference call via telephone, please call one of the following numbers approximately 10 minutes prior to the planned start of the call:

Call-in number: (877) 265-5808
Local call-in number: (706) 679-7931
Conference ID#: 35479749

The conference call can also be accessed through a live webcast on the Company's website at http://www.xmradio.com/(click on "Investor Info" link at the bottom of the page). The webcast of the call will also be archived on the Company's Web site. A replay of the conference call will be available after 11:30 a.m. ET on February 28 until May 28 via the following numbers:

Playback Numbers: (800) 642-1687
Local playback number: (706) 645-9291
Conference ID#: 35479749

About XM

XM (NASDAQ:XMSR) is America's number one satellite radio company with more than 9 million subscribers. Broadcasting live daily from studios in Washington, DC, New York City, Chicago, Nashville, Toronto and Montreal, XM's 2008 lineup includes more than 170 digital channels of choice from coast to coast: commercial-free music, premier sports, news, talk radio, comedy, children's and entertainment programming; and the most advanced traffic and weather information.

XM, the leader in satellite-delivered entertainment and data services for the automobile market through partnerships with General Motors, Honda, Hyundai, Nissan, Porsche, Subaru, Suzuki and Toyota is available in 140 different vehicle models for 2008. XM's industry-leading products are available at consumer electronics retailers nationwide. XM programming is also available through XM Radio Online, as downloads of original XM shows via podcasts from XM's Web site or the Apple's iTunes Store, and as streams of commercial-free XM music channels to AT&T and Alltel wireless customers through XM Radio Mobile. For more information about XM hardware, programming and partnerships, please visit http://www.xmradio.com/.

Factors that could cause actual results to differ materially from those in the forward-looking statements in this press release include demand for XM Satellite Radio's service, our significant expenditures and losses, our dependence on technology and third party vendors, our potential need for additional financing, the health of our satellites, the impact of our proposed merger with Sirius, our substantial indebtedness as well as other risks described in XM Satellite Radio Holdings Inc.'s Form 10-K filed with the Securities and Exchange Commission on 3-1-07. Copies of the filing are available upon request from XM Radio's Investor Relations Department.

XM SATELLITE RADIO HOLDINGS INC.
AUDITED CONSOLIDATED STATEMENT OF OPERATIONS

Three months ended Twelve months ended
December 31, December 31,
(in thousands, except
share and per share
data) 2007 2006 2007 2006
(unaudited) (unaudited)
Revenue:
Subscription $266,445 $220,542 $1,005,479 $825,626
Activation 5,006 4,459 19,354 16,192
Merchandise 13,068 10,076 28,333 21,720
Net ad sales 10,801 11,045 39,148 35,330
Other 12,379 11,000 44,228 34,549
Total revenue 307,699 257,122 1,136,542 933,417
Operating expenses:
Cost of revenue (excludes
depreciation &
amortization,
shown below):
Revenue share & royalties 106,779 43,405 256,344 149,010
Customer care &
billing operations (1) 36,703 28,850 126,776 104,871
Cost of merchandise 21,448 20,525 62,003 48,949
Ad sales (1) 4,848 4,768 20,592 15,961
Satellite &
terrestrial (1) 13,271 12,729 54,434 49,019
Broadcast & operations:
Broadcast (1) 7,033 5,869 26,602 23,049
Operations (1) 9,351 9,164 38,465 34,683
Total broadcast &
operations 16,384 15,033 65,067 57,732
Programming & content (1) 51,297 46,427 183,900 165,196
Total cost of revenue 250,730 171,737 769,116 590,738
Research & development
(excludes depreciation
& amortization, shown
below) (1) 9,265 9,080 33,077 37,428
General & administrative
(excludes depreciation
& amortization, shown
below) (1) 33,755 30,327 150,109 88,626
Marketing (excludes
depreciation &
amortization,
shown below):
Retention & support (1) 12,702 9,064 44,580 31,842
Subsidies &
distribution (1) 90,028 68,822 259,143 224,862
Advertising &
marketing (1) 59,639 57,431 178,743 164,379
Marketing 162,369 135,317 482,466 421,083
Amortization of GM
liability 6,504 6,504 26,015 29,760
Total marketing 168,873 141,821 508,481 450,843
Depreciation & amortization 47,407 44,043 187,196 168,880
Total operating expenses (1) 510,030 397,008 1,647,979 1,336,515
Operating loss (202,331) (139,886) (511,437) (403,098)
Other income (expense):
Interest income 2,807 3,499 14,084 21,664
Interest expense (28,816) (34,958) (116,605) (121,304)
Loss from de-leveraging
transactions (728) (21,443) (3,693) (122,189)
Loss from impairment of
investments (3,360) (57,646) (39,665) (76,572)
Equity in net loss of
affiliate (3,768) (5,286) (16,491) (23,229)
Minority interest (3,267) - (11,532) -
Other income (expense) 776 233 2,019 5,842
Net loss before income
taxes (238,687) (255,487) (683,320) (718,886)
(Provision for) benefit
from deferred income
taxes (131) (1,237) 939 14
Net loss (238,818) (256,724) (682,381) (718,872)
8.25% Series B and C
preferred stock
dividend requirement - (530) - (6,127)
8.25% Series B preferred
stock retirement loss - - - (755)
8.25% Series C preferred
stock retirement loss - (5,938) - (5,938)
Net loss attributable to
common stockholders $(238,818) $(263,192) $(682,381) $(731,692)
Net loss per common share
- basic and diluted $(0.78) $(0.90) $(2.22) $(2.70)
Weighted average shares
used in computing net
loss per common share
- basic and diluted 307,474,429 293,797,483 306,700,022 270,586,682

Reconciliation of Net
loss to Adjusted
operating loss:
Net loss as reported $(238,818) $(256,724) $(682,381) $(718,872)
Add back Net loss items
excluded from Adjusted
operating loss:
Interest income (2,807) (3,499) (14,084) (21,664)
Interest expense 28,816 34,958 116,605 121,304
Provision for (benefit
from) deferred income taxes 131 1,237 (939) (14)
Loss from de-leveraging
transactions 728 21,443 3,693 122,189
Loss from impairment of
investments 3,360 57,646 39,665 76,572
Equity in net loss of
affiliate 3,768 5,286 16,491 23,229
Minority interest 3,267 - 11,532 -
Other (income) expense (776) (233) (2,019) (5,842)
Operating loss (202,331) (139,886) (511,437) (403,098)
Depreciation & amortization 47,407 44,043 187,196 168,880
Total share-based payment
expense 38,001 26,024 86,199 68,046
Adjusted operating loss (2) $(116,923) $(69,819) $(238,042) $(166,172)

Footnotes: Three months Twelve months
(1) These captions include non-cash ended ended
share-based payment expense as December 31, December 31,
follows: 2007 2006 2007 2006
(in thousands) (unaudited)(unaudited)

Customer care & billing operations $820 $615 $2,483 $1,338
Ad sales 514 870 1,910 2,397
Satellite & terrestrial 689 1,010 2,308 2,649
Broadcast 729 1,131 2,716 2,880
Operations 434 853 1,600 2,425
Programming & content 2,170 4,216 8,855 10,878
Research & development 2,283 3,257 7,929 8,655
General & administrative 5,400 10,710 26,689 28,124
Retention & support 2,962 3,362 9,709 8,700
Subsidies & distribution 9,167 - 9,167 -
Advertising & marketing 12,833 - 12,833 -
Total share-based payment expense $38,001 $26,024 $86,199 $68,046

(2) Adjusted operating loss is net loss before interest income, interest
expense, income taxes, depreciation and amortization, loss from de-
leveraging transactions, loss from impairment of investments, equity
in net loss of affiliate, minority interest, other income (expense)
and share-based payment expense. This non-GAAP measure should be used
in addition to, but not as a substitute for, the analysis provided in
the statement of operations. We believe Adjusted operating loss is a
useful measure of our operating performance and improves comparability
between periods. Adjusted operating loss is a significant basis used
by management to measure our success in acquiring, retaining and
servicing subscribers because we believe this measure provides insight
into our ability to grow revenues in a cost-effective manner. We
believe Adjusted operating loss is a calculation used as a basis for
investors, analysts and credit rating agencies to evaluate and compare
the periodic and future operating performances and value of our
company and similar companies in our industry.

Because we have funded the build-out of our system through the raising
and expenditure of large amounts of capital, our results of operations
reflect significant charges for depreciation, amortization and
interest expense. We believe Adjusted operating loss provides helpful
information about the operating performance of our business apart from
the expenses associated with our physical plant or capital structure.
We believe it is appropriate to exclude depreciation, amortization and
interest expense due to the variability of the timing of capital
expenditures, estimated useful lives and fluctuation in interest
rates. We exclude income taxes due to our tax losses and timing
differences, so that certain periods will reflect a tax benefit, while
others an expense, neither of which is reflective of our operating
results. Because of the variety of equity awards used by companies,
the varying methodologies for determining share-based payment
expense and the subjective assumptions involved in those
determinations, we believe excluding share-based payment expense
enhances the ability of management and investors to compare our core
operating results with those of similar companies in our industry.

Equity in net loss of affiliate represents our share of losses in a
non-US affiliate in a similar business and over which we exercise
significant influence, but do not control. Management believes it is
appropriate to exclude this loss when evaluating the performance of
our own operations. Additionally, we exclude loss from de-leveraging
transactions, loss from impairment of investments, minority interest
and other income (expense) because these items represent activity
outside of our core business operations and can distort period to
period comparisons of operating performance.

There are limitations associated with the use of Adjusted operating
loss in evaluating our company compared with net loss, which reflects
overall financial performance. Adjusted operating loss does not
reflect the impact on our financial results of (i) interest income,
(ii) interest expense, (iii) income taxes, (iv) depreciation and
amortization, (v) loss from de-leveraging transactions, (vi) loss from
impairment of investments, (vii) equity in net loss of affiliate,
(viii) minority interest, (ix) other income (expense) and (x) share-
based payment expense, which are included in the computation of net
loss. Users that wish to compare and evaluate our company based on our
net loss should refer to our Consolidated Statements of Operations.
Adjusted operating loss does not purport to represent operating loss
or cash flow from operating activities, as those terms are defined
under United States generally accepted accounting principles, and
should not be considered as an alternative to those measurements as an
indicator of our performance. In addition, our measure of Adjusted
operating loss may not be comparable to similarly titled measures of
other companies.

XM SATELLITE RADIO HOLDINGS INC.
SELECTED FINANCIAL AND OPERATING METRICS

As of
(in thousands) December 31, 2007 December 31, 2006
SELECTED BALANCE SHEET DATA

Cash and cash equivalents $156,686 $218,216
System under construction 151,142 126,049
Property and equipment, net 710,370 849,662
DARS license 141,412 141,387
Investments 36,981 80,591
Total assets 1,609,230 1,840,618
Total subscriber deferred revenue 514,926 427,193
Total deferred income 134,803 140,695
Long-term debt, net of current portion 1,480,639 1,286,179
Total liabilities 2,533,787 2,238,499
Stockholders' deficit (984,303) (397,880)

Three months Twelve months
ended ended
December 31, December 31,
SELECTED OPERATING METRICS 2007 2006 2007 2006

Subscriber Data (in thousands,
except percentages):
OEM Gross Subscriber Additions (1) 766 524 2,622 2,085
Retail Gross Subscriber
Additions (2) 364 540 1,269 1,781
Total Gross Subscriber
Additions (3) 1,130 1,065 3,891 3,866

OEM Net Subscriber Additions (1) 361 172 1,213 884
Retail Net Subscriber Additions (2) 99 271 185 812
Total Net Subscriber Additions (4) 460 443 1,398 1,696

Conversion Rate (5) 53.9% 52.4% 52.7% 53.3%
Monthly Churn Rate (6) 1.72% 1.79% 1.75% 1.77%

OEM Subscribers 3,590 2,655 3,590 2,655
Retail Subscribers 4,552 4,380 4,552 4,380
Subscribers in OEM Promotional
Periods 777 555 777 555
XM Activated Vehicles with Rental
Car Companies 61 5 61 5
Data Services Subscribers 46 33 46 33
Total Ending Subscribers (7) 9,027 7,629 9,027 7,629

Percentage of Ending Subscribers
on Annual and Multi-Year Plans 44.8% 44.2% 44.8% 44.2%
Percentage of Ending Subscribers
on Family Plans 23.6% 22.5% 23.6% 22.5%

Revenue Data (monthly average):
Subscription Revenue per Retail,
OEM & Other Subscriber $10.42 $10.26 $10.39 $10.37
Subscription Revenue per Subscriber
in OEM Promotional Periods $5.97 $6.35 $6.15 $6.23
Subscription Revenue per XM
Activated Vehicle with Rental
Car Companies $6.75 $3.10 $7.03 $5.96
Subscription Revenue per Subscriber
of Data Services $35.95 $34.33 $34.77 $31.74

Average Monthly Subscription Revenue
per Subscriber ("ARPU") (8) $10.14 $10.05 $10.15 $10.09
Net Ad Sales Revenue per Subscriber $0.41 $0.50 $0.40 $0.43
Activation, Merchandise and Other
Revenue per Subscriber $1.16 $1.16 $0.93 $0.89
Total Revenue per Subscriber $11.71 $11.72 $11.48 $11.41

Expense Data:
Subscriber Acquisition Costs
("SAC") (9) $87 $74 $75 $65
Cost Per Gross Addition
("CPGA") (10) $140 $128 $121 $108

(Certain totals may not add due to the effects of rounding)

Footnotes:
(1) OEM subscribers include subscribers in OEM promotional periods as well
as XM activated vehicles with rental car companies.

(2) Retail subscribers include data services subscribers.

(3) Gross Subscriber Additions are paying subscribers newly activated in
the reporting period.

(4) Net Subscriber Additions represent the total net incremental paying
subscribers added during the period (Gross Subscriber Additions less
disconnects).

(5) We measure the success of these promotional programs included in our
OEM promotional subscriber count based on the percentage of new
promotional subscribers that elect to receive the XM service and
convert to self-paying subscribers after the initial promotion period.
We refer to this as the "conversion rate."

(6) Monthly Churn Rate represents the average percentage of self-paying
Retail, OEM & Other Subscribers that discontinued service during the
month divided by the monthly weighted average ending subscribers.
Monthly Churn Rate does not include OEM promotional period
deactivations or deactivations resulting from the change-out of XM-
enabled rental car activity.

(7) Subscribers-Subscribers are those who are receiving and have agreed to
pay for our service, including those who are currently in promotional
periods paid in part by vehicle manufacturers, as well as XM activated
radios in vehicles for which we have a contractual right to receive
payment for the use of our service. We count radios individually as
subscribers. Retail subscribers consist primarily of subscribers who
purchased their radio at retail outlets, distributors, or through XM's
direct sales efforts. OEM subscribers are self-paying subscribers
whose XM radio was installed by an OEM and are not currently in OEM
promotional programs. OEM promotional subscribers are subscribers who
receive a fixed period of XM service where XM receives revenue from
the OEM for the trial period following the initial purchase or lease
of the vehicle. In situations where XM receives no revenue from the
OEM during the trial period, the subscriber is not included in XM's
subscriber count. At the time of sale, some vehicle owners receive a
three month prepaid trial subscription. Promotional periods generally
include the period of trial service plus 30 days to handle the receipt
and processing of payments. The automated activation program provides
activated XM radios on dealer lots for test drives but XM does not
include these vehicles in its subscriber count. XM's OEM partners
generally indicate the inclusion of three months of XM service on the
window sticker of XM-enabled vehicles. XM, historically and including
the 2006 model year, receives a negotiated rate for providing audio
service to rental car companies. Beginning with the 2007 model year,
XM entered into marketing arrangements which govern the rate which XM
receives for providing audio service on certain rental fleet vehicles.
Data services subscribers are those subscribers that are receiving
services that include stand-alone XM WX Satellite Weather service,
stand-alone XM Radio Online service and stand-alone NavTraffic
service. Stand-alone XM WX Satellite Weather service packages range in
price from $29.99 to $99.99 per month. Stand-alone XM Radio Online
service is $7.99 per month. Stand-alone NavTraffic service is $9.95
per month. XM generally charges a range of $9.99-$11.87 per month for
its audio service for annual and multi-year plans and $6.99 per month
for a family plan.

(8) Subscription Revenue includes monthly subscription revenues for our
satellite audio service and data services, net of any promotions or
discounts.

(9) SAC - Subscriber acquisition costs include Subsidies & distribution
and the negative gross profit on merchandise revenue. Subscriber
acquisition costs are divided by gross additions to calculate what we
refer to as "SAC." The previously reported amounts under the prior
definition for the three and twelve months ended December 31, 2006
were $74 and $64, respectively.

(10) CPGA - CPGA costs include the amounts in SAC, as well as Advertising
& marketing. These costs are divided by the gross additions for the
period to calculate CPGA. CPGA costs do not include marketing staff
(included in Retention & support) or the amortization of the GM
guaranteed payments (included in Amortization of GM liability). The
previously reported amounts under the prior definition for the three
and twelve months ended December 31, 2006 were $128 and $108,
respectively.

First Call Analyst:
FCMN Contact: david.butler@xmradio.com

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http://www.newscom.com/cgi-bin/prnh/20070313/XMLOGO
AP Archive:

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Source: XM Satellite Radio Holdings Inc.

CONTACT: Investors, Joe Wilkinson, +1-202-380-4008,
joe.wilkinson@xmradio.com or Richard Sloane, +1-202-380-1439,
richard.sloane@xmradio.com; Media, Nathaniel Brown, +1-212-708-6170,
nathaniel.brown@xmradio.com or Chance Patterson, +1-202-380-4318,
chance.patterson@xmradio.com, all of XM Satellite Radio Holdings Inc.

Web site:

http://www.xmradio.com/

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