SiriusXM Reports Record 2010 Results

SiriusXM Reports Record 2010 Results

- Subscribers Grow to Record 20.2 Million

- Revenue of $2.82 Billion, Up 14% Over 2009

- Adjusted EBITDA of $626 Million, Up 35% Over 2009

- Free Cash Flow of $210 Million, Up 14% Over 2009

- 2011 Guidance Expects Continued Growth

NEW YORK, Feb. 15, 2011 /PRNewswire/ -- Sirius XM Radio (Nasdaq: SIRI) today announced full year 2010 financial results, including revenue of $2.82 billion, up 14% over 2009 revenue of $2.47 billion, and adjusted EBITDA of $626 million, up 35% from $463 million in 2009.

(Logo: http://photos.prnewswire.com/prnh/20101014/NY82093LOGO )

"SiriusXM's results in 2010 were exceptional, surpassing our guidance and achieving record revenues, adjusted EBITDA and free cash flow. Our unparalleled content and the continuing improvements in the economy helped us attain a record-high subscriber base of 20.2 million. Our laser-like focus on profitable growth delivered a 35% increase in adjusted EBITDA to $626 million, and produced free cash flow of more than $200 million," noted Mel Karmazin, Chief Executive Officer, SiriusXM.

"Our renewed contracts with Howard Stern and the NFL, as well as investments in exciting new content, ensure that our subscribers will continue to enjoy the unparalleled entertainment that has made SiriusXM the largest subscription radio company in the world," said Karmazin. "With the outlook for improving U.S. auto sales, declining capital expenditures and the expanded functionality coming with the launch of SiriusXM 2.0, we look forward to another year of growth and strong financial performance."

This discussion of adjusted operating results, including adjusted EBITDA, excludes the effects of stock-based compensation and certain purchase price accounting adjustments. A reconciliation of these non-GAAP items to their nearest GAAP equivalent is contained in the financial supplements included with this release.

Net subscriber additions in 2010 were 1,418,206, compared to a net subscriber loss in 2009 of 231,098. Ending subscribers as of December 31, 2010 were 20,190,964, up 8% from the 18,772,758 subscribers reported as of December 31, 2009. Subscriber acquisition cost (SAC) per gross subscriber addition was $59 in 2010, a 6% improvement from the $63 reported in 2009. Average self-pay monthly customer churn was 1.9% in 2010, as compared with 2.0% in 2009.

Free cash flow in 2010 was $210 million, compared to $185 million in 2009. GAAP net income (loss) attributable to common stockholders for 2010 and 2009 was $43 million and ($538) million, respectively, or $0.01 and ($0.15) per diluted share, respectively. Excluding debt extinguishment and restructuring charges, our 2010 net income (loss) attributable to common stockholders for 2010 and 2009, would have been $227 million and ($238) million, respectively.

"Our strong incremental margins, combined with revenue growth and tight expense control have produced solid operating leverage, improving adjusted EBITDA by over $750 million from 2008 to 2010," said David Frear, SiriusXM's Executive Vice President and Chief Financial Officer. "We ended the year with $587 million of cash after the early retirement of approximately $38 million of our 3.25% Convertible Notes due 2011. Since the beginning of 2011, we have purchased another $131 million of our debt in the market. With only $104 million of debt maturing before 2013, declining capital expenditures and growing free cash flow, our financial strength and flexibility has never been better."

FOURTH QUARTER 2010 RESULTS

Fourth quarter 2010 revenue of $736 million was up 9% from the $676 million in the fourth quarter of 2009, while fourth quarter 2010 adjusted EBITDA was $144 million, up 25% from the $115 million in the fourth quarter of 2009.

Net subscriber additions in the fourth quarter of 2010 were 328,789, versus net subscriber additions of 257,028 in the fourth quarter of 2009. Subscriber acquisition cost (SAC) per gross subscriber addition was $58 in the fourth quarter of 2010, a 9% improvement from the $64 reported in the fourth quarter of 2009. Average self-pay monthly customer churn was 1.9% in the fourth quarter of 2010, as compared with 2.0% in the fourth quarter of 2009.

Free cash flow in the fourth quarter of 2010 was $167 million, compared to $150 million in the fourth quarter of 2009. GAAP net (loss) income attributable to common stockholders for the fourth quarter of 2010 and 2009 was ($81) million and $12 million, respectively, or ($0.02) and $0.00 per diluted share, respectively. Excluding debt extinguishment and restructuring charges, our net income attributable to common stockholders for fourth quarter 2010 and 2009, would have been $64 million and $18 million, respectively.

2011 GUIDANCE

In 2011, we expect full-year revenue of approximately $3 billion. Our adjusted EBITDA is projected to approximate $715 million.

"With continuing improvements in auto sales, and self-pay churn and conversion rates for 2011 similar to our strong performance in 2010, we expect to grow our net new subscribers by another 1.4 million in 2011, continuing our track record of solid subscriber growth. We also expect this year's free cash flow to approach $300 million," said Karmazin.

Subscriber Data.

The following table contains actual subscriber data for the years ended December 31, 2010 and 2009, respectively:

Unaudited
---------
For the Years Ended December
31,
-----------------------------
2010 2009
---- ----

Beginning subscribers 18,772,758 19,003,856
Gross subscriber additions 7,768,827 6,208,482
Deactivated subscribers (6,350,621) (6,439,580)
Net additions 1,418,206 (231,098)
--------- --------
Ending subscribers 20,190,964 18,772,758
========== ==========

Retail 6,947,830 7,725,750
OEM 13,104,972 10,930,952
Rental 138,162 116,056
Ending subscribers 20,190,964 18,772,758
========== ==========

Self-pay 16,686,799 15,703,932
Paid promotional 3,504,165 3,068,826
Ending subscribers 20,190,964 18,772,758
========== ==========

Retail (777,920) (1,179,452)
OEM 2,174,020 935,114
Rental 22,106 13,240
------ ------
Net additions 1,418,206 (231,098)
========= ========

Self-pay 982,867 154,275
Paid promotional 435,339 (385,373)
Net additions 1,418,206 (231,098)
========= ========

Daily weighted average number of
subscribers 19,385,055 18,529,696
========== ==========

Average self-pay monthly churn
(1) 1.9% 2.0%
=== ===

Conversion rate (2) 46.2% 45.4%
==== ====

____________

See accompanying footnotes.

Subscribers. The improvement was due to the 25% increase in gross subscriber additions, primarily resulting from increases in U.S. light vehicle sales, new vehicle penetration and returning activations.

Average Self-pay Monthly Churn. The decrease was due to an improving economy, the success of retention and win-back programs and reductions in non-pay cancellation rates.

Conversion Rate. The increase was primarily due to marketing to promotional period subscribers and an improving economy.

Metrics.

The following table contains our key operating metrics based on our unaudited adjusted results of operations for the years ended December 31, 2010 and 2009, respectively:

Unaudited Adjusted
------------------
For the Years Ended December
31,
-----------------------------
(in thousands, except for per
subscriber amounts) 2010 2009
---- ----

ARPU (3) $11.73 $10.95
SAC, per gross subscriber addition
(4) $59 $63
Customer service and billing
expenses, per average
subscriber (5) $1.03 $1.05
Free cash flow (6) $210,481 $185,319
Adjusted total revenue (8) $2,838,898 $2,526,703
Adjusted EBITDA (7) $626,288 $462,539

____________

See accompanying footnotes.

ARPU increased in the year ended December 31, 2010 primarily due to the full year impact of the U.S. Music Royalty Fee, which was introduced in the third quarter of 2009, increased revenues from the sale of "Best of" programming, decreases in discounts on multi-subscription and internet packages, and increased net advertising revenue, partially offset by an increase in the number of subscribers on promotional plans.

SAC, Per Gross Subscriber Addition, decreased in the year ended December 31, 2010 primarily due to lower per radio subsidy rates for certain OEMs and growth in subscriber reactivations and royalties from radio manufacturers compared to the year ended December 31, 2009, partially offset by a 49% increase in OEM production with factory-installed satellite radios.

Customer Service and Billing Expenses, Per AverageSubscriber, decreased in the year ended December 31, 2010 primarily due to lower call center expenses as a result of moving calls to lower cost locations, partially offset by higher call volume.

Free Cash Flow increased in the year ended December 31, 2010 principally as a result of improvements in net cash provided by operating activities, partially offset by increases in capital expenditures. Net cash provided by operating activities increased $79 million to $513 million for the year ended December 31, 2010 compared to the $434 million provided by operating activities for the year ended December 31, 2009. Capital expenditures for property and equipment for the year ended December 31, 2010 increased $63 million to $312 million compared to $249 million for the year ended December 31, 2009. The increase in net cash provided by operating activities was primarily the result of growth in deferred revenue and changes in net assets. The increase in capital expenditures for the year ended December 31, 2010 was primarily the result of satellite construction and launch expenditures for our XM-5 and FM-6 satellites.

Adjusted Total Revenue. Set forth below are our adjusted total revenue for the years ended December 31, 2010 and 2009, respectively. Our adjusted total revenue includes the recognition of deferred subscriber revenues acquired in the merger between SIRIUS and XM (the "Merger") that are not recognized in our results under purchase price accounting and the elimination of the benefit in earnings from deferred revenue associated with our investment in XM Canada acquired in the Merger.

Unaudited Adjusted
------------------
For the Years Ended
December 31,
--------------------
(in thousands) 2010 2009
---- ----

Revenue:
Subscriber revenue, including effects of
rebates (GAAP) $2,414,174 $2,287,503
Advertising revenue, net of agency fees
(GAAP) 64,517 51,754
Equipment revenue (GAAP) 71,355 50,352
Other revenue (GAAP) 266,946 83,029
------- ------
Total revenue (GAAP) 2,816,992 2,472,638
Purchase price accounting adjustments:
Subscriber revenue, including effects of
rebates 14,655 46,814
Other revenue 7,251 7,251
Adjusted total revenue $2,838,898 $2,526,703
========== ==========

For the year ended December 31, 2010, the increase in subscriber revenue was driven by the increase in subscribers and an increase in the sale of "Best of" programming and the decreases in discounts on multi-subscription and internet packages, partially offset by an increase in the number of subscribers on promotional plans. The increase in advertising revenue was driven by more effective sales efforts and improvements in the national market for advertising. The increase in equipment revenue was driven by royalties from a greater number of OEM installations. The increase in other revenue was driven by the U.S. Music Royalty Fee, which was introduced in the third quarter of 2009.

Adjusted EBITDA. EBITDA is defined as net income (loss) before interest and investment income (loss); interest expense, net of amounts capitalized; income tax expense and depreciation and amortization. Adjusted EBITDA removes the impact of other income and expense, losses on extinguishment of debt as well as certain other charges, such as, goodwill impairment; restructuring, impairments and related costs; certain purchase price accounting adjustments and share-based payment expense.

Unaudited Adjusted
------------------
For the Years Ended
December 31,
--------------------
(in thousands) 2010 2009
---- ----

Total revenue $2,838,898 $2,526,703
Operating expenses:
Revenue share and royalties 543,377 486,990
Programming and content 353,213 370,470
Customer service and billing 239,754 232,405
Satellite and transmission 78,720 82,170
Cost of equipment 35,281 40,188
Subscriber acquisition costs 492,480 401,670
Sales and marketing 220,014 232,199
Engineering, design and
development 40,042 36,152
General and administrative 209,729 181,920
Total operating expenses 2,212,610 2,064,164
--------- ---------
Adjusted EBITDA $626,288 $462,539
======== ========

For the year ended December 31, 2010, the increase in Adjusted EBITDA was primarily due to an increase in revenue, partially offset by an increase in expenses included in adjusted EBITDA. The increase in expenses was primarily driven by higher subscriber acquisition costs related to the 25% increase in gross additions and higher revenue share and royalty expenses associated with growth in revenues subject to revenue sharing and royalty arrangements.

The following table contains actual subscriber data for the three months ended December 31, 2010 and 2009, respectively:

Unaudited
---------
For the Three Months Ended
December 31,
---------------------------
2010 2009
---- ----

Beginning subscribers 19,862,175 18,515,730
Gross subscriber additions 2,075,418 1,882,950
Deactivated subscribers (1,746,629) (1,625,922)
Net additions 328,789 257,028
------- -------
Ending subscribers 20,190,964 18,772,758
========== ==========

Retail 6,947,830 7,725,750
OEM 13,104,972 10,930,952
Rental 138,162 116,056
Ending subscribers 20,190,964 18,772,758
========== ==========

Self-pay 16,686,799 15,703,932
Paid promotional 3,504,165 3,068,826
Ending subscribers 20,190,964 18,772,758
========== ==========

Retail (140,732) (200,154)
OEM 474,509 442,422
Rental (4,988) 14,760
------ ------
Net additions 328,789 257,028
======= =======

Self-pay 350,980 247,182
Paid promotional (22,191) 9,846
Net additions 328,789 257,028
======= =======

Daily weighted average number of
subscribers 19,990,447 18,576,151
========== ==========

Average self-pay monthly churn (1) 1.9% 2.0%
=== ===

Conversion rate (2) 45.1% 46.4%
==== ====

____________

See accompanying footnotes.

Subscribers. The improvement was due to the 10% increase in gross subscriber additions, primarily resulting from increases in U.S. light vehicle sales, new vehicle penetration and returning activations.

Average Self-pay Monthly Churn. The decrease was due to an improving economy, the success of retention and win-back programs and reductions in non-pay cancellation rates.

Conversion Rate. The decrease was primarily the result of the mix of vehicles transitioning to self-pay.

Metrics.

The following table contains our key operating metrics based on our unaudited adjusted results of operations for the three months ended December 31, 2010 and 2009, respectively:

Unaudited Adjusted
------------------
For the Three Months Ended
December 31,
---------------------------
(in thousands, except for per
subscriber amounts) 2010 2009
---- ----

ARPU (9) $11.80 $11.58
SAC, per gross subscriber addition
(10) $58 $64
Customer service and billing
expenses, per average
subscriber (11) $1.11 $1.06
Free cash flow (12) $167,355 $149,547
Adjusted total revenue (14) $740,239 $683,779
Adjusted EBITDA (13) $144,493 $115,339

____________

See accompanying footnotes.

ARPU increased in the three months ended December 31, 2010 primarily due to increased revenue from the U.S. Music Royalty Fee, increased revenues from the sale of "Best of" programming, decreases in discounts on multi-subscription and internet packages, and increased net advertising revenue, partially offset by an increase in the number of subscribers on promotional plans.

SAC, Per Gross Subscriber Addition, decreased in the three months ended December 31, 2010 primarily due to lower per radio subsidy rates for certain OEMs and growth in subscriber reactivations and royalties from radio manufacturers compared to the three months ended December 31, 2009, partially offset by a 16% increase in OEM production with factory-installed satellite radios.

Customer Service and Billing Expenses, Per AverageSubscriber, increased in the three months ended December 31, 2010 primarily due higher call volume, partially offset by lower call center expenses as a result of moving calls to lower cost locations.

Free Cash Flow increased in the three months ended December 31, 2010 principally as a result of improvements in net cash provided by operating activities, partially offset by increases in capital expenditures. Net cash provided by operating activities increased $41 million to $222 million for the three months ended December 31, 2010 compared to the $181 million provided by operations for the three months ended December 31, 2009. Capital expenditures for property and equipment for the three months ended December 31, 2010 increased $23 million to $54 million compared to $31 million for the three months ended December 31, 2009. The increase in net cash provided by operating activities was primarily the result of growth in deferred revenue and changes in net assets. The increase in capital expenditures for the three months ended December 31, 2010 was primarily the result of satellite construction and launch expenditures for our XM-5 and FM-6 satellites.

Adjusted Total Revenue. Set forth below are our adjusted total revenue for the three months ended December 31, 2010 and 2009, respectively.

Unaudited Adjusted
------------------
For the Three Months Ended
December 31,
---------------------------
(in thousands) 2010 2009
---- ----

Revenue:
Subscriber revenue, including effects of
rebates (GAAP) $620,916 $588,048
Advertising revenue, net of agency fees
(GAAP) 18,221 14,467
Equipment revenue (GAAP) 20,730 19,008
Other revenue (GAAP) 76,032 54,650
------ ------
Total revenue (GAAP) 735,899 676,173
Purchase price accounting adjustments:
Subscriber revenue, including effects of
rebates 2,527 5,793
Other revenue 1,813 1,813
Adjusted total revenue $740,239 $683,779
======== ========

For the three months ended December 31, 2010, the increase in subscriber revenue was driven by the increase in subscribers as well as an increase in the sale of "Best of" programming and the decreases in discounts on multi-subscription and internet packages, partially offset by an increase in the number of subscribers on promotional plans. The increase in advertising revenue was driven by more effective sales efforts and improvements in the national market for advertising. The increase in equipment revenue was driven by royalties from increased OEM installations. The increase in other revenue was driven by the increase in revenue from the U.S. Music Royalty Fee.

Adjusted EBITDA.

Unaudited Adjusted
------------------
For the Three Months Ended
December 31,
---------------------------
(in thousands) 2010 2009
---- ----

Total revenue $740,239 $683,779
Operating expenses:
Revenue share and royalties 143,539 124,527
Programming and content 89,939 92,857
Customer service and billing 66,446 58,887
Satellite and transmission 20,075 25,094
Cost of equipment 13,095 12,200
Subscriber acquisition costs 127,879 127,588
Sales and marketing 60,782 80,161
Engineering, design and
development 9,739 8,018
General and administrative 64,252 39,108
Total operating expenses 595,746 568,440
------- -------
Adjusted EBITDA $144,493 $115,339
======== ========

For the three months ended December 31, 2010, the increase in Adjusted EBITDA was primarily due to an increase in revenue, partially offset by an increase in expenses included in adjusted EBITDA. The increase in expenses was primarily driven by higher general and administrative costs and higher revenue share and royalty expenses associated with growth in revenues subject to revenue sharing and royalty arrangements.

SIRIUS XM RADIO INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

Actual
------
For the Three Months
Ended December 31,
------------------
(in thousands, except
per share data) 2010 2009
---- ----
(Unaudited) (Unaudited)
Revenue:
Subscriber revenue,
including effects of
rebates $620,916 $588,048
Advertising revenue, net
of agency fees 18,221 14,467
Equipment revenue 20,730 19,008
Other revenue 76,032 54,650
------ ------
Total revenue 735,899 676,173
Operating expenses:

Cost of services:
Revenue share and
royalties 114,843 100,355
Programming and content 77,318 77,297
Customer service and
billing 66,441 58,887
Satellite and
transmission 20,002 24,597
Cost of equipment 13,095 12,200
Subscriber acquisition
costs 107,295 109,733
Sales and marketing 58,640 76,308
Engineering, design and
development 10,181 8,056
General and
administrative 70,036 44,601
Depreciation and
amortization 66,747 77,826
Restructuring,
impairments and related
costs 59,730 2,640
------ -----
Total operating expenses 664,328 592,500
------- -------
Income from operations 71,571 83,673
Other income (expense):
Interest expense, net of
amounts capitalized (72,414) (68,745)
Loss on extinguishment
of debt and credit
facilities, net (85,426) (3,879)
Interest and investment
income (loss) 1,822 2,517
Other income 1,563 851
Total other expense (154,455) (69,256)
-------- -------
(Loss) income before
income taxes (82,884) 14,417
Income tax benefit
(expense) 1,440 (2,637)

Net (loss) income (81,444) 11,780
Preferred stock
beneficial conversion
feature - -
Net (loss) income
attributable to common
stockholders $(81,444) $11,780
======== =======
Net (loss) income per
common share:
Basic $(0.02) $0.00
====== =====
Diluted $(0.02) $0.00
====== =====

Weighted average common
shares outstanding:
Basic 3,725,500 3,642,475
========= =========
Diluted 3,725,500 6,264,259
========= =========

Actual
------
For the Twelve Months
Ended December 31,
------------------
(in thousands, except
per share data) 2010 2009
---- ----

Revenue:
Subscriber revenue,
including effects of
rebates $2,414,174 $2,287,503
Advertising revenue, net
of agency fees 64,517 51,754
Equipment revenue 71,355 50,352
Other revenue 266,946 83,029
------- ------
Total revenue 2,816,992 2,472,638
Operating expenses:

Cost of services:
Revenue share and
royalties 435,410 397,210
Programming and content 305,914 308,121
Customer service and
billing 241,680 234,456
Satellite and
transmission 80,947 84,033
Cost of equipment 35,281 40,188
Subscriber acquisition
costs 413,041 340,506
Sales and marketing 215,454 228,956
Engineering, design and
development 45,390 41,031
General and
administrative 240,970 227,554
Depreciation and
amortization 273,691 309,450
Restructuring,
impairments and related
costs 63,800 32,807
------ ------
Total operating expenses 2,351,578 2,244,312
--------- ---------
Income from operations 465,414 228,326
Other income (expense):
Interest expense, net of
amounts capitalized (295,643) (315,668)
Loss on extinguishment
of debt and credit
facilities, net (120,120) (267,646)
Interest and investment
income (loss) (5,375) 5,576
Other income 3,399 3,355
Total other expense (417,739) (574,383)
-------- --------
(Loss) income before
income taxes 47,675 (346,057)
Income tax benefit
(expense) (4,620) (5,981)

Net (loss) income 43,055 (352,038)
Preferred stock
beneficial conversion
feature - (186,188)
Net (loss) income
attributable to common
stockholders $43,055 $(538,226)
======= =========
Net (loss) income per
common share:
Basic $0.01 $(0.15)
===== ======
Diluted $0.01 $(0.15)
===== ======

Weighted average common
shares outstanding:
Basic 3,693,259 3,585,864
========= =========
Diluted 6,391,071 3,585,864
========= =========

SIRIUS XM RADIO INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

As of December 31,
------------------
2010 2009
---- ----
(in thousands, except share and
per share data)
ASSETS
Current assets:
Cash and cash equivalents $586,691 $383,489
Accounts receivable, net 121,658 113,580
Receivables from distributors 67,576 48,738
Inventory, net 21,918 16,193
Prepaid expenses 134,994 100,273
Related party current assets 6,719 106,247
Deferred tax asset 44,787 72,640
Other current assets 7,432 18,620
----- ------
Total current assets 991,775 859,780
Property and equipment, net 1,761,274 1,711,003
Long-term restricted investments 3,396 3,400
Deferred financing fees, net 54,135 66,407
Intangible assets, net 2,629,200 2,695,115
Goodwill 1,834,856 1,834,856
Related party long-term assets 30,162 111,767
Other long-term assets 78,288 39,878
------ ------
Total assets $7,383,086 $7,322,206
========== ==========
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Accounts payable and accrued
expenses $593,174 $543,686
Accrued interest 72,453 74,566
Current portion of deferred
revenue 1,201,346 1,083,430
Current portion of deferred
credit on executory contracts 271,076 252,831
Current maturities of long-term
debt 195,815 13,882
Related party current liabilities 15,845 108,246
------ -------
Total current liabilities 2,349,709 2,076,641
Deferred revenue 273,973 255,149
Deferred credit on executory
contracts 508,012 784,078
Long-term debt 2,695,856 2,799,702
Long-term related party debt 325,907 263,579
Deferred tax liability 914,637 940,182
Related party long-term
liabilities 24,517 46,301
Other long-term liabilities 82,839 61,052
------ ------
Total liabilities 7,175,450 7,226,684
--------- ---------

Commitments and contingencies
Stockholders' equity:
Preferred stock, par value
$0.001; 50,000,000 authorized at
December 31, 2010 and 2009:
Series A convertible preferred
stock (liquidation preference of
$0 at December 31, 2010 and
$51,370 at
December 31, 2009); no shares
issued and outstanding at
December 31, 2010 and 24,808,959
shares issued and outstanding at
December 31, 2009 - 25

Convertible perpetual preferred
stock, series B (liquidation
preference of $13 at December
31, 2010 and 2009); 12,500,000
shares issued and outstanding at
December 31, 2010 and 2009 13 13
Convertible preferred stock,
series C junior; no shares
issued and outstanding at
December 31, 2010 and 2009,
respectively - -
Common stock, par value $0.001;
9,000,000,000 shares authorized
at December 31, 2010 and 2009;
3,933,195,112 and 3,882,659,087
shares issued and outstanding at
December 31, 2010 and 2009,
respectively 3,933 3,882

Accumulated other comprehensive
loss, net of tax (5,861) (6,581)
Additional paid-in capital 10,420,604 10,352,291
Accumulated deficit (10,211,053) (10,254,108)
----------- -----------
Total stockholders' equity 207,636 95,522
------- ------
Total liabilities and
stockholders' equity $7,383,086 $7,322,206
========== ==========

SIRIUS XM RADIO INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Years Ended
December 31,
-------------------
(in thousands) 2010 2009
---- ----

Cash flows from operating
activities:
Net income (loss) $43,055 $(352,038)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation and amortization 273,691 309,450
Non-cash interest expense, net of
amortization of premium 42,841 43,066
Provision for doubtful accounts 32,379 30,602
Restructuring, impairments and
related costs 66,731 26,964
Amortization of deferred income
related to equity method
investment (2,776) (2,776)
Loss on extinguishment of debt and
credit facilities, net 120,120 267,646
Loss on investments, net 11,722 13,664
Loss on disposal of assets 1,017 -
Share-based payment expense 60,437 73,981
Deferred income taxes 2,308 5,981
Other non-cash purchase price
adjustments (250,727) (202,054)
Changes in operating assets and
liabilities:
Accounts receivable (39,236) (42,158)
Receivables from distributors (11,023) (2,788)
Inventory (5,725) 8,269
Related party assets (9,803) 15,305
Prepaid expenses and other current
assets 75,374 10,027
Other long-term assets 17,671 86,674
Accounts payable and accrued
expenses 5,420 (46,645)
Accrued interest (884) 2,429
Deferred revenue 133,444 93,578
Related party liabilities (53,413) 50,172
Other long-term liabilities 272 44,481
--- ------
Net cash provided by operating
activities 512,895 433,830
------- -------

Cash flows from investing
activities:
Additions to property and equipment (311,868) (248,511)
Sale of restricted and other
investments 9,454 -
----- ---
Net cash used in investing
activities (302,414) (248,511)
-------- --------

Cash flows from financing
activities:
Proceeds from exercise of warrants
and stock options 10,839 -
Preferred stock issuance, net of
costs - (3,712)
Long-term borrowings, net of costs 1,274,707 582,612
Related party long-term
borrowings, net of costs 196,118 362,593
Payment of premiums on redemption
of debt (84,326) (17,075)
Repayment of long-term borrowings (1,262,396) (755,447)
Repayment of related party long-
term borrowings (142,221) (351,247)
-------- --------
Net cash used in financing
activities (7,279) (182,276)
------ --------
Net increase in cash and cash
equivalents 203,202 3,043
Cash and cash equivalents at
beginning of period 383,489 380,446
Cash and cash equivalents at end of
period $586,691 $383,489
======== ========

Footnotes

Average self-pay monthly churn; conversion rate; ARPU; SAC, per gross subscriber addition; customer service and billing expenses, per average subscriber; adjusted revenue; adjusted EBITDA and free cash flow are not measures of financial performance under GAAP. We believe these operational and Non-GAAP financial performance measures provide meaningful supplemental information regarding our operating performance and are used by us for budgetary and planning purposes; when publicly providing our business outlook; as a means to evaluate period-to-period comparisons; and to compare our performance to that of our competitors. We believe that investors also use our current and projected metrics to monitor the performance of our business and to make investment decisions.

These operational and Non-GAAP financial performance measures are used in addition to and in conjunction with results presented in accordance with GAAP. These Non-GAAP financial performance measures 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.

(1) Average self-pay monthly churn represents the monthly average of self-pay deactivations for the quarter divided by the average number of self-pay subscribers for the quarter. Average self-pay churn for the year is the average of the quarterly average self-pay churn.

(2) We measure the percentage of owners and lessees of new vehicles that receive our service and convert to become self-paying subscribers after the initial promotion period. We refer to this as the "conversion rate." At the time satellite radio enabled vehicles are sold or leased, the owners or lessees generally receive trial subscriptions ranging from three to twelve months. Promotional periods generally include the period of trial service plus 30 days to handle the receipt and processing of payments. We measure conversion rate three months after the period in which the trial service ends.

(3) ARPU is derived from total earned subscriber revenue, net advertising revenue and other subscription-related revenue, net of purchase price accounting adjustments, divided by the number of months in the period, divided by the daily weighted average number of subscribers for the period. Other subscription-related revenue includes the U.S. Music Royalty Fee, which was initially charged to subscribers in the third quarter of 2009. Purchase price accounting adjustments include the recognition of deferred subscriber revenues not recognized in purchase price accounting associated with the Merger. ARPU is calculated as follows (in thousands, except for subscriber and per subscriber amounts):

Unaudited
---------
For the Years Ended
December 31,
--------------------
2010 2009
---- ----

Subscriber revenue (GAAP) $2,414,174 $2,287,503
Net advertising revenue (GAAP) 64,517 51,754
Other subscription-related
revenue (GAAP) 234,148 48,679
Purchase price accounting
adjustments 14,655 46,814
------ ------
$2,727,494 $2,434,750
========== ==========

Daily weighted average number of
subscribers 19,385,055 18,529,696
========== ==========

ARPU $11.73 $10.95
====== ======

(4) Subscriber acquisition cost, per gross subscriber addition (or SAC, per gross subscriber addition) is derived from subscriber acquisition costs and margins from the direct sale of radios and accessories, excluding share-based payment expense and purchase price accounting adjustments, divided by the number of gross subscriber additions for the period. Purchase price accounting adjustments associated with the Merger include the elimination of the benefit of amortization of deferred credits on executory contracts recognized at the Merger date attributable to an OEM. SAC, per gross subscriber addition, is calculated as follows (in thousands, except for subscriber and per subscriber amounts):

Unaudited
---------
For the Years Ended
December 31,
--------------------
2010 2009
---- ----

Subscriber acquisition costs
(GAAP) $413,041 $340,506
Less: margin from direct sales
of radios and
accessories (GAAP) (36,074) (10,164)
Add: purchase price accounting
adjustments 79,439 61,164
------ ------
$456,406 $391,506
======== ========

Gross subscriber additions 7,768,827 6,208,482
========= =========

SAC, per gross subscriber
addition $59 $63
=== ===

(5) Customer service and billing expenses, per average subscriber, is derived from total customer service and billing expenses, excluding share-based payment expense and purchase price accounting adjustments associated with the Merger, divided by the number of months in the period, divided by the daily weighted average number of subscribers for the period. We believe the exclusion of share-based payment expense in our calculation of customer service and billing expenses, per average subscriber, is useful given the significant variation in expense that can result from changes in the fair market value of our common stock, the effect of which is unrelated to the operational conditions that give rise to variations in the components of our customer service and billing expenses. Purchase price accounting adjustments associated with the Merger include the elimination of the benefit associated with incremental share-based payment arrangements recognized at the Merger date. Customer service and billing expenses, per average subscriber, is calculated as follows (in thousands, except for subscriber and per subscriber amounts):

Unaudited
---------
For the Years Ended
December 31,
--------------------
2010 2009
---- ----

Customer service and billing expenses
(GAAP) $241,680 $234,456
Less: share-based payment expense,
net of purchase
price accounting adjustments (GAAP) (2,207) (2,504)
Add: purchase price accounting
adjustments 281 453
--- ---
$239,754 $232,405
======== ========

Daily weighted average number of
subscribers 19,385,055 18,529,696
========== ==========
Customer service and billing expenses,
per average
subscriber $1.03 $1.05
===== =====

(6) Free cash flow is calculated as follows (in thousands):

Unaudited
---------
For the Years Ended
December 31,
--------------------
2010 2009
---- ----

Net cash provided by operating
activities $512,895 $433,830
Additions to property and equipment (311,868) (248,511)
Restricted and other investment
activity 9,454 -
Free cash flow $210,481 $185,319
======== ========

(7) EBITDA is defined as net income (loss) before interest and investment income (loss); interest expense, net of amounts capitalized; taxes expense and depreciation and amortization. We adjust EBITDA to remove the impact of other income and expense, loss on extinguishment of debt 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, (ii) goodwill impairment, (iii) restructuring, impairments, and related costs, (iv) depreciation and amortization and (v) 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 believe the exclusion of restructuring, impairments and related costs is useful given the nature of these expenses. We also believe the exclusion of share-based payment expense is useful given the significant variation in expense that can result from changes in the fair market value of our common stock.

Adjusted EBITDA has certain limitations in that it does not take into account the impact to our statement of operations of certain expenses, including share-based payment expense and certain purchase price accounting for the Merger. 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 (loss) as disclosed in our consolidated statements of operations. 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 (loss) to the adjusted EBITDA is calculated as follows (in thousands):

Unaudited
---------
For the Years Ended
December 31,
--------------------
2010 2009
---- ----

Net income (loss) (GAAP): $43,055 $(352,038)
Add back items excluded from Adjusted
EBITDA:
Purchase price accounting adjustments:
Revenues 21,906 54,065
Operating expenses (261,832) (240,891)
Share-based payment expense, net of
purchase price
accounting adjustments (GAAP) 63,309 78,782
Depreciation and amortization (GAAP) 273,691 309,450
Restructuring, impairments and related costs
(GAAP) 63,800 32,807
Interest expense, net of amounts capitalized
(GAAP) 295,643 315,668
Loss on extinguishment of debt and credit
facilities, net (GAAP) 120,120 267,646
Interest and investment loss (income) (GAAP) 5,375 (5,576)
Other (income) (GAAP) (3,399) (3,355)
Income tax expense (GAAP) 4,620 5,981

Adjusted EBITDA $626,288 $462,539
======== ========

(8) The following tables reconcile our actual revenues and operating expenses to our adjusted revenues and operating expenses:

Unaudited For the Year Ended December 31,
2010
------------------------------------------
As Purchase
(in thousands) Reported Price
--------- ---------
Accounting
----------
Adjustments
-----------

Revenue:
Subscriber revenue,
including effects
of rebates $2,414,174 $14,655
Advertising
revenue, net of
agency fees 64,517 -
Equipment revenue 71,355 -
Other revenue 266,946 7,251
------- -----
Total revenue $2,816,992 $21,906
========== =======
Operating expenses
Cost of services:
Revenue share and
royalties 435,410 107,967
Programming and
content 305,914 57,566
Customer service
and billing 241,680 281
Satellite and
transmission 80,947 1,170
Cost of equipment 35,281 -
Subscriber
acquisition costs 413,041 79,439
Sales and marketing 215,454 13,983
Engineering, design
and development 45,390 520
General and
administrative 240,970 906
Depreciation and
amortization (a) 273,691 -
Restructuring,
impairments and
related costs 63,800 -
Share-based
payment expense
(b) - -
Total operating
expenses $2,351,578 $261,832
========== ========

(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. The
increased
depreciation and
amortization for
the year ended
December 31, 2010
was $68,000.

(b) Amounts related
to share-based
payment expense
included in
operating expenses
were as follows:

Programming and
content $9,817 $450
Customer service
and billing 1,926 281
Satellite and
transmission 3,109 288
Sales and marketing 8,996 427
Engineering, design
and development 5,348 520
General and
administrative 31,241 906

Total share-based
payment expense $60,437 $2,872
======= ======

Unaudited For the Year Ended December 31,
2010
------------------------------------------
Allocation
(in thousands) of Adjusted
----------- --------
Share-
based
-------
Payment
Expense
--------

Revenue:
Subscriber revenue,
including effects of
rebates $- $2,428,829
Advertising revenue,
net of agency fees - 64,517
Equipment revenue - 71,355
Other revenue - 274,197
--- -------
Total revenue $- $2,838,898
=== ==========
Operating expenses
Cost of services:
Revenue share and
royalties - 543,377
Programming and content (10,267) 353,213
Customer service and
billing (2,207) 239,754
Satellite and
transmission (3,397) 78,720
Cost of equipment - 35,281
Subscriber acquisition
costs - 492,480
Sales and marketing (9,423) 220,014
Engineering, design and
development (5,868) 40,042
General and
administrative (32,147) 209,729
Depreciation and
amortization (a) - 273,691
Restructuring,
impairments and
related costs - 63,800
Share-based payment
expense (b) 63,309 63,309
Total operating
expenses $- $2,613,410
=== ==========

(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.
The increased
depreciation and
amortization for the
year ended December
31, 2010 was $68,000.

(b) Amounts related to
share-based payment
expense included in
operating expenses
were as follows:

Programming and content $- $10,267
Customer service and
billing - 2,207
Satellite and
transmission - 3,397
Sales and marketing - 9,423
Engineering, design and
development - 5,868
General and
administrative - 32,147

Total share-based
payment expense $- $63,309
=== =======

Unaudited For the Year Ended December
31, 2009
-------------------------------------
As Purchase
(in thousands) Reported Price
--------- ---------
Accounting
----------
Adjustments
-----------

Revenue:
Subscriber revenue,
including effects of
rebates $2,287,503 $46,814
Advertising revenue, net
of agency fees 51,754 -
Equipment revenue 50,352 -
Other revenue 83,029 7,251
------ -----
Total revenue $2,472,638 $54,065
========== =======
Operating expenses
Cost of services:
Revenue share and
royalties 397,210 89,780
Programming and content 308,121 72,069
Customer service and
billing 234,456 453
Satellite and
transmission 84,033 1,339
Cost of equipment 40,188 -
Subscriber acquisition
costs 340,506 61,164
Sales and marketing 228,956 13,507
Engineering, design and
development 41,031 977
General and
administrative 227,554 1,602
Depreciation and
amortization (a) 309,450 -
Restructuring,
impairments and related
costs 32,807 -
Share-based payment
expense (b) - -
--- ---
Total operating expenses $2,244,312 $240,891
========== ========

(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.
The increased
depreciation and
amortization for the
year ended December 31,
2009 was $106,000.

(b) Amounts related to
share-based payment
expense included in
operating expenses were
as follows:

Programming and content $9,064 $656
Customer service and
billing 2,051 453
Satellite and
transmission 2,745 457
Sales and marketing 9,608 656
Engineering, design and
development 4,879 977
General and
administrative 45,634 1,602

Total share-based
payment expense $73,981 $4,801
======= ======

Unaudited For the Year Ended December
31, 2009
-------------------------------------
Allocation
(in thousands) of Adjusted
----------- --------
Share-
based
-------
Payment
Expense
--------

Revenue:
Subscriber revenue, including
effects of rebates $- $2,334,317
Advertising revenue, net of
agency fees - 51,754
Equipment revenue - 50,352
Other revenue - 90,280
--- ------
Total revenue $- $2,526,703
=== ==========
Operating expenses
Cost of services:
Revenue share and royalties - 486,990
Programming and content (9,720) 370,470
Customer service and billing (2,504) 232,405
Satellite and transmission (3,202) 82,170
Cost of equipment - 40,188
Subscriber acquisition costs - 401,670
Sales and marketing (10,264) 232,199
Engineering, design and
development (5,856) 36,152
General and administrative (47,236) 181,920
Depreciation and amortization
(a) - 309,450
Restructuring, impairments and
related costs - 32,807
Share-based payment expense (b) 78,782 78,782
------ ------
Total operating expenses $- $2,485,203
=== ==========

(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. The
increased depreciation and
amortization for the year ended
December 31, 2009 was $106,000.

(b) Amounts related to share-
based payment expense included
in operating expenses were as
follows:

Programming and content $- $9,720
Customer service and billing - 2,504
Satellite and transmission - 3,202
Sales and marketing - 10,264
Engineering, design and
development - 5,856
General and administrative - 47,236

Total share-based payment
expense $- $78,782
=== =======

(9) ARPU is calculated as follows (in thousands, except for subscriber and per subscriber amounts):

Unaudited
---------
For the Three Months Ended
December 31,
---------------------------
2010 2009
---- ----

Subscriber revenue (GAAP) $620,916 $588,048
Net advertising revenue (GAAP) 18,221 14,467
Other subscription-related
revenue (GAAP) 65,953 36,828
Purchase price accounting
adjustments 2,527 5,793
----- -----
$707,617 $645,136
======== ========

Daily weighted average number of
subscribers 19,990,447 18,576,151
========== ==========

ARPU $11.80 $11.58
====== ======

(10) SAC, per gross subscriber addition, is calculated as follows (in thousands, except for subscriber and per subscriber amounts):

Unaudited
---------
For the Three Months Ended
December 31,
---------------------------
2010 2009
---- ----

Subscriber acquisition costs
(GAAP) $107,295 $109,733
Less: margin from direct sales
of radios
and accessories (GAAP) (7,635) (6,808)
Add: purchase price accounting
adjustments 20,584 17,855
------ ------
$120,244 $120,780
======== ========

Gross subscriber additions 2,075,418 1,882,950
========= =========

SAC, per gross subscriber
addition $58 $64
=== ===

(11) 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,
---------------------------
2010 2009
---- ----

Customer service and billing expenses
(GAAP) $66,441 $58,887
Less: share-based payment expense,
net of purchase price accounting
adjustments (GAAP) (50) (94)
Add: purchase price accounting
adjustments 55 94
--- ---
$66,446 $58,887
======= =======

Daily weighted average number of
subscribers 19,990,447 18,576,151
========== ==========
Customer service and billing expenses,
per average subscriber $1.11 $1.06
===== =====

(12) Free cash flow is calculated as follows (in thousands):

Unaudited
For the Three Months Ended
December 31,
--------------------------
2010 2009
---- ----

Net cash provided by operating
activities $221,849 $180,723
Additions to property and
equipment (54,494) (31,176)
Free cash flow $167,355 $149,547
======== ========

(13) The reconciliation of net income (loss) to the adjusted EBITDA is calculated as follows (in thousands):

Unaudited
---------
For the Three Months Ended
December 31,
---------------------------
2010 2009
---- ----

Net (loss) income (GAAP): $(81,444) $11,780
Add back items excluded from Adjusted
EBITDA:
Purchase price accounting
adjustments:
Revenues 4,340 7,606
Operating expenses (67,928) (63,886)
Share-based payment expense, net of
purchase price
accounting adjustments (GAAP) 10,033 7,480
Depreciation and amortization (GAAP) 66,747 77,826
Restructuring, impairments and
related costs (GAAP) 59,730 2,640
Interest expense, net of amounts
capitalized (GAAP) 72,414 68,745
Loss on extinguishment of debt and
credit facilities, net (GAAP) 85,426 3,879
Interest and investment (income)
(GAAP) (1,822) (2,517)
Other (income) (GAAP) (1,563) (851)
Income tax (benefit) expense (GAAP) (1,440) 2,637

Adjusted EBITDA $144,493 $115,339
======== ========

(14) The following tables reconcile our actual revenues and operating expenses to our adjusted revenues and operating expenses:

Unaudited For the Three Months Ended
December 31, 2010
------------------------------------
As Purchase
(in thousands) Reported Price
--------- ---------
Accounting
----------
Adjustments
-----------

Revenue:
Subscriber revenue,
including effects of
rebates $620,916 $2,527
Advertising revenue, net
of agency fees 18,221 -
Equipment revenue 20,730 -
Other revenue 76,032 1,813
------ -----
Total revenue $735,899 $4,340
======== ======
Operating expenses
Cost of services:
Revenue share and
royalties 114,843 28,696
Programming and content 77,318 14,762
Customer service and
billing 66,441 55
Satellite and
transmission 20,002 273
Cost of equipment 13,095 -
Subscriber acquisition
costs 107,295 20,584
Sales and marketing 58,640 3,290
Engineering, design and
development 10,181 93
General and
administrative 70,036 175
Depreciation and
amortization (a) 66,747 -
Restructuring,
impairments and related
costs 59,730 -
Share-based payment
expense (b) - -
Total operating expenses $664,328 $67,928
======== =======

(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.
The increased
depreciation and
amortization for the
three months ended
December 31, 2010 was
$16,000.

(b) Amounts related to
share-based payment
expense included in
operating expenses were
as follows:

Programming and content $2,059 $82
Customer service and
billing (5) 55
Satellite and
transmission 148 52
Sales and marketing 1,066 82
Engineering, design and
development 442 93
General and
administrative 5,784 175

Total share-based
payment expense $9,494 $539
====== ====

Unaudited For the Three Months Ended
December 31, 2010
------------------------------------
Allocation
(in thousands) of Adjusted
----------- --------
Share-
based
-------
Payment
Expense
--------

Revenue:
Subscriber revenue,
including effects of
rebates $- $623,443
Advertising revenue, net of
agency fees - 18,221
Equipment revenue - 20,730
Other revenue - 77,845
--- ------
Total revenue $- $740,239
=== ========
Operating expenses
Cost of services:
Revenue share and royalties - 143,539
Programming and content (2,141) 89,939
Customer service and
billing (50) 66,446
Satellite and transmission (200) 20,075
Cost of equipment - 13,095
Subscriber acquisition
costs - 127,879
Sales and marketing (1,148) 60,782
Engineering, design and
development (535) 9,739
General and administrative (5,959) 64,252
Depreciation and
amortization (a) - 66,747
Restructuring, impairments
and related costs - 59,730
Share-based payment
expense (b) 10,033 10,033
------
Total operating expenses $- $732,256
=== ========

(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. The
increased depreciation and
amortization for the three
months ended December 31,
2010 was $16,000.

(b) Amounts related to
share-based payment
expense included in
operating expenses were as
follows:

Programming and content $- $2,141
Customer service and
billing - 50
Satellite and transmission - 200
Sales and marketing - 1,148
Engineering, design and
development - 535
General and administrative - 5,959

Total share-based payment
expense $- $10,033
=== =======

Unaudited For the Three Months Ended
December 31, 2009
------------------------------------
As Purchase
(in thousands) Reported Price
--------- ---------
Accounting
----------
Adjustments
-----------

Revenue:
Subscriber revenue,
including effects of
rebates $588,048 $5,793
Advertising revenue, net
of agency fees 14,467 -
Equipment revenue 19,008 -
Other revenue 54,650 1,813
------ -----
Total revenue $676,173 $7,606
======== ======
Operating expenses
Cost of services:
Revenue share and
royalties 100,355 24,172
Programming and content 77,297 17,361
Customer service and
billing 58,887 94
Satellite and
transmission 24,597 327
Cost of equipment 12,200 -
Subscriber acquisition
costs 109,733 17,855
Sales and marketing 76,308 3,522
Engineering, design and
development 8,056 205
General and
administrative 44,601 350
Depreciation and
amortization (a) 77,826 -
Restructuring,
impairments and related
costs 2,640 -
Share-based payment
expense (b) - -
--- ---
Total operating expenses $592,500 $63,886
======== =======

(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.
The increased
depreciation and
amortization for the
three months ended
December 31, 2009 was
$20,000.

(b) Amounts related to
share-based payment
expense included in
operating expenses were
as follows:

Programming and content $1,646 $155
Customer service and
billing - 94
Satellite and
transmission (276) 106
Sales and marketing (474) 143
Engineering, design and
development 38 205
General and
administrative 5,493 350

Total share-based
payment expense $6,427 $1,053
====== ======

Unaudited For the Three Months Ended
December 31, 2009
------------------------------------
Allocation
(in thousands) of Adjusted
----------- --------
Share-
based
-------
Payment
Expense
--------

Revenue:
Subscriber revenue,
including effects of
rebates $- $593,841
Advertising revenue, net of
agency fees - 14,467
Equipment revenue - 19,008
Other revenue - 56,463
--- ------
Total revenue $- $683,779
=== ========
Operating expenses
Cost of services:
Revenue share and royalties - 124,527
Programming and content (1,801) 92,857
Customer service and
billing (94) 58,887
Satellite and transmission 170 25,094
Cost of equipment - 12,200
Subscriber acquisition
costs - 127,588
Sales and marketing 331 80,161
Engineering, design and
development (243) 8,018
General and administrative (5,843) 39,108
Depreciation and
amortization (a) - 77,826
Restructuring, impairments
and related costs - 2,640
Share-based payment
expense (b) 7,480 7,480
----- -----
Total operating expenses $- $656,386
=== ========

(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. The
increased depreciation and
amortization for the three
months ended December 31,
2009 was $20,000.

(b) Amounts related to
share-based payment
expense included in
operating expenses were as
follows:

Programming and content $- $1,801
Customer service and
billing - 94
Satellite and transmission - (170)
Sales and marketing - (331)
Engineering, design and
development - 243
General and administrative - 5,843

Total share-based payment
expense $- $7,480
=== ======

About Sirius XM Radio

Sirius XM Radio is America's satellite radio company. SiriusXM broadcasts more than 135 channels of commercial-free music, and premier sports, news, talk, entertainment, traffic, weather, and data services to more than 20 million subscribers in cars, trucks, boats and aircraft, and through a wide range of mobile devices.

SiriusXM offers an array of content from some of the biggest names in entertainment, as well as from professional sports leagues, major colleges, and national news and talk providers. SiriusXM programming is also available at siriusxm.com, and on Apple iPhone and iPod touch, BlackBerry and Android-powered mobile devices using the SiriusXM Premium Online App.

SiriusXM has arrangements with every major automaker and its radio products are available at shop.siriusxm.com as well as retail locations nationwide.

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," "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 statement: our dependence upon automakers and other third parties, our substantial indebtedness; the useful life of our satellites; and our competitive position versus other forms of audio and video entertainment. 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, 2009 and our Quarterly Report on Form 10-Q for the period ending September 30, 2010, which are 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.

Follow SiriusXM on Twitter or like the SiriusXM page on Facebook.

E-SIRI

Contact Information for Investors and Financial Media:

Investors:

William Prip
212 584 5289
william.prip@siriusxm.com

Hooper Stevens
212 901 6718
hooper.stevens@siriusxm.com

Media:
Patrick Reilly
212 901 6646
patrick.reilly@siriusxm.com

SOURCE Sirius XM Radio

Photo:http://photos.prnewswire.com/prnh/20101014/NY82093LOGO
http://photoarchive.ap.org/
Sirius XM Radio

CONTACT: Investors: William Prip, +1-212-584-5289, william.prip@siriusxm.com, or Hooper Stevens, +1-212-901-6718, hooper.stevens@siriusxm.com, or Media: Patrick Reilly, +1-212-901-6646, patrick.reilly@siriusxm.com

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

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