SiriusXM Reports Second Quarter 2013 Results

SiriusXM Reports Second Quarter 2013 Results

-- Record Revenue of $940 Million, Up 12% From Second Quarter of 2012

-- Net Income of $126 Million

-- Adjusted EBITDA Grows 19% to a Record $283 Million

-- Company Raises Full Year EBITDA Guidance to $1.14 Billion

-- Share Repurchase Program Approaches $1.3 Billion Year to Date

NEW YORK, July 25, 2013 /PRNewswire/ -- Sirius XM Radio (NASDAQ: SIRI)today announced second quarter 2013 financial and operating results, including record revenue of $940 million, up 12% from the second quarter 2012 revenue of $838 million. Net income for the second quarter 2013 and 2012 was $126 million and $3.1 billion, respectively. Net income in the second quarter of 2012 benefitted from a $3 billion reversal of deferred income tax valuation allowances.

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

Income before income taxes rose 47% to $202 million in the second quarter compared to $138 million in the second quarter of 2012. Adjusted EBITDA for the second quarter of 2013 reached a record $283 million, up 19% from $237 million in the second quarter of 2012.

"SiriusXM's second quarter results reflect record performance on almost every vital metric: the 25 million subscriber milestone, record revenue, adjusted EBITDA and adjusted EBITDA margin. We grew our revenue at double digit rates for the sixth consecutive quarter while being very mindful of our costs as we invest in advanced IP and telematics platforms designed to provide more services to our subscribers and automakers," noted Jim Meyer, Chief Executive Officer, SiriusXM.

"Our increase in adjusted EBITDA guidance speaks to our excellent first half performance as well as our outlook for further growth later this year. SiriusXM has now purchased 391 million shares of its common stock so far this year for nearly $1.3 billion, and we plan to continue using our growing free cash flow and strong balance sheet in a very disciplined way to reward our investors," added Meyer.

Additional highlights of the second quarter include:


-- Adjusted EBITDA Margin Reaches 30%. Adjusted EBITDA climbed 19% from
last year's second quarter to a record quarterly figure of $283 million,
and a record adjusted EBITDA margin of 30%.
-- Subscribers Exceed 25 Million Amid Record Growth. Net subscriber
additions in the quarter were 715,762, up from 622,042 in the second
quarter of 2012, marking the largest quarterly gain since the fourth
quarter of 2007. Our total paid subscriber base reached a record 25.1
million, up 9% from the prior year period. Self-pay net subscriber
additions were 423,076, while the self-pay subscriber base reached a
record high of 20.3 million, up 9% from the prior year period. Total
paid and unpaid trials grew by 528,000 from the first quarter 2013 to
6.7 million.
-- Free Cash Flow Reaches a Second Quarter Record. Free cash flow was $237
million, up from $230 million in the second quarter of 2012.
Year-to-date free cash flow reached $379 million, an increase of 55%
from the same period in 2012.
"During the second quarter, we repurchased 195 million shares of our common stock for $650 million. We also repurchased approximately $130 million in principal amount of our outstanding debt during the second quarter. Following our $1 billion debt issuance in May, the Company's outstanding debt was approximately 3.2x our trailing adjusted EBITDA, below our target leverage of 3.5x. Combined with our strong cash position of $652 million and undrawn revolving credit facility of $1.25 billion, we have tremendous flexibility to continue pursuing capital returns, debt repurchases, and acquisitions," noted David Frear, SiriusXM's Executive Vice President and Chief Financial Officer.

2013 GUIDANCE

After increasing its total net additions guidance on July 9, 2013, the Company today increased its 2013 guidance for adjusted EBITDA and reiterated guidance for subscriber growth, revenue, and free cash flow:


-- Self-pay net subscriber additions of approximately 1.6 million,
-- Total net subscriber additions of approximately 1.5 million,
-- Revenue of over $3.7 billion,
-- Adjusted EBITDA of approximately $1.14 billion, and
-- Free cash flow of approximately $915 million.


SECOND QUARTER 2013 RESULTS




SIRIUS XM RADIO INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)


For the Three Months Ended For the Six Months Ended June
June 30, 30,
-------------------------- ------------------------------

(in thousands, except per share data) 2013 2012 2013 2012
---- ---- ---- ----


Revenue:

Subscriber revenue $814,718 $730,285 $1,598,060 $1,430,526

Advertising revenue 21,757 20,786 41,968 39,456

Equipment revenue 18,443 16,417 36,599 33,370

Other revenue 85,192 70,055 160,881 138,912
------ ------ ------- -------

Total revenue 940,110 837,543 1,837,508 1,642,264

Operating expenses:

Cost of services:

Revenue share and royalties 155,859 135,426 304,390 267,537

Programming and content 70,381 65,169 144,991 135,265

Customer service and billing 80,290 68,679 160,684 134,866

Satellite and transmission 19,493 17,551 39,188 35,661

Cost of equipment 5,442 7,150 12,469 12,956

Subscriber acquisition costs 129,992 119,475 246,103 235,596

Sales and marketing 68,058 57,422 133,956 115,781

Engineering, design and development 15,052 6,272 29,894 18,962

General and administrative 60,392 65,664 116,732 125,550

Depreciation and amortization 67,415 66,793 134,433 132,910

Total operating expenses 672,374 609,601 1,322,840 1,215,084
------- ------- --------- ---------

Income from operations 267,736 227,942 514,668 427,180

Other income (expense):

Interest expense, net of amounts capitalized (49,728) (72,770) (95,902) (149,742)

Loss on extinguishment of debt and credit facilities, net (16,377) (15,650) (16,377) (25,621)

Interest and investment income (loss) 294 (1,728) 1,932 (2,871)

Other income (loss) 256 (173) 502 (749)

Total other expense (65,555) (90,321) (109,845) (178,983)
------- ------- -------- --------

Income before income taxes 202,181 137,621 404,823 248,197

Income tax (expense) benefit (76,659) 2,996,549 (155,699) 2,993,747

Net income $125,522 $3,134,170 $249,124 $3,241,944
======== ========== ======== ==========

Foreign currency translation adjustment, net of tax (109) 18 (281) (38)

Total comprehensive income $125,413 $3,134,188 $248,843 $3,241,906
======== ========== ======== ==========

Net income per common share:

Basic $0.02 $0.49 $0.04 $0.51
===== ===== ===== =====

Diluted $0.02 $0.48 $0.04 $0.50
===== ===== ===== =====

Weighted average common shares outstanding:

Basic 6,354,755 3,765,573 6,307,541 3,766,508
========= ========= ========= =========

Diluted 6,447,517 6,506,159 6,526,698 6,521,614
========= ========= ========= =========




SIRIUS XM RADIO INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

June 30, 2013 December 31, 2012
------------- -----------------

(in thousands, except share and per share data) (Unaudited)

ASSETS

Current assets:

Cash and cash equivalents $651,769 $520,945

Accounts receivable, net 101,203 106,142

Receivables from distributors 111,288 104,425

Inventory, net 16,688 25,337

Prepaid expenses 149,408 122,157

Related party current assets 9,127 13,167

Deferred tax asset 894,303 923,972

Other current assets 10,177 12,037
------ ------

Total current assets 1,943,963 1,828,182

Property and equipment, net 1,523,615 1,571,922

Long-term restricted investments 3,999 3,999

Deferred financing fees, net 31,757 38,677

Intangible assets, net 2,494,474 2,519,610

Goodwill 1,815,365 1,815,365

Related party long-term assets 36,506 44,954

Long-term deferred tax asset 1,089,981 1,219,256

Other long-term assets 11,526 12,878

Total assets $8,951,186 $9,054,843
========== ==========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable and accrued expenses $550,959 $587,652

Accrued interest 37,822 33,954

Current portion of deferred revenue 1,539,841 1,474,138

Current portion of deferred credit on executory contracts 71,854 207,854

Current maturities of long-term debt 3,873 4,234

Related party current liabilities 7,927 6,756
----- -----

Total current liabilities 2,212,276 2,314,588

Deferred revenue 152,914 159,501

Deferred credit on executory contracts 3,285 5,175

Long-term debt 3,036,660 2,222,080

Long-term related party debt 209,244 208,906

Related party long-term liabilities 17,578 18,966

Other long-term liabilities 80,383 86,062

Total liabilities 5,712,340 5,015,278
--------- ---------


Stockholders' equity:

Preferred stock, par value $0.001; 50,000,000 authorized at June 30, 2013 and December 31, 2012:

Convertible perpetual preferred stock, series B-1 (liquidation preference of $0.001 per share); 0 - 6
and 6,250,100 shares issued and outstanding at June 30, 2013 and December 31, 2012,
respectively

Common stock, par value $0.001; 9,000,000,000 shares authorized; 6,257,721,498 and 5,262,440,085 6,258 5,263
shares issued; 6,247,221,498 and 5,262,440,085 shares outstanding, at June 30, 2013 and December

31, 2012, respectively

Accumulated other comprehensive (loss) income, net of tax (161) 120

Additional paid-in capital 9,330,188 10,345,566

Treasury stock, at cost; 10,500,000 and 0 shares of common stock at June 30, 2013 and December 31, 2012, respectively (35,173) -

Accumulated deficit (6,062,266) (6,311,390)
---------- ----------

Total stockholders' equity 3,238,846 4,039,565
--------- ---------

Total liabilities and stockholders' equity $8,951,186 $9,054,843
========== ==========





SIRIUS XM RADIO INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

For the Six Months Ended June 30,
---------------------------------

(in thousands) 2013 2012
---- ----

Cash flows from operating activities:

Net income $249,124 $3,241,944

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization 134,433 132,910

Non-cash interest expense, net of amortization of premium 10,932 21,031

Provision for doubtful accounts 20,153 14,879

Amortization of deferred income related to equity method investment (1,388) (1,388)

Loss on extinguishment of debt and credit facilities, net 16,377 25,621

(Gain) loss on unconsolidated entity investments, net (1,382) 3,469

Dividend received from unconsolidated entity investment 13,217 -

Loss on disposal of assets 126 488

Share-based payment expense 30,012 28,869

Deferred income taxes 159,191 (2,995,542)

Other non-cash purchase price adjustments (137,889) (147,328)

Changes in operating assets and liabilities:

Accounts receivable (15,214) (26,879)

Receivables from distributors (6,863) (12,259)

Inventory 8,649 (173)

Related party assets 205 6,813

Prepaid expenses and other current assets (28,317) (39,308)

Other long-term assets 1,353 16,579

Accounts payable and accrued expenses (69,310) (51,596)

Accrued interest 3,868 (7,434)

Deferred revenue 59,116 79,288

Related party liabilities 1,171 1,501

Other long-term liabilities (5,543) 2,238

Net cash provided by operating activities 442,021 293,723
------- -------


Cash flows from investing activities:

Additions to property and equipment (62,980) (48,944)

Net cash used in investing activities (62,980) (48,944)
------- -------


Cash flows from financing activities:

Proceeds from exercise of stock options 21,658 38,671

Payment of premiums on redemption of debt (14,719) (19,211)

Repayment of long-term borrowings (283,180) (169,899)

Long-term borrowings, net of costs 1,136,640 -

Common stock repurchased and retired (1,108,616) -

Net cash used in financing activities (248,217) (150,439)
-------- --------

Net increase in cash and cash equivalents 130,824 94,340

Cash and cash equivalents at beginning of period 520,945 773,990

Cash and cash equivalents at end of period $651,769 $868,330
======== ========






Subscriber Data and Operating Metrics

The following table contains subscriber data and key operating metrics for the three and six months ended June 30, 2013 and 2012, respectively:







Unaudited
---------

For the Three Months Ended June 30, For the Six Months Ended
June 30,
----------------------------------- -------------------------

2013 2012 2013 2012
---- ---- ---- ----


Beginning subscribers 24,353,226 22,297,420 23,900,336 21,892,824

Gross subscriber additions 2,655,488 2,481,004 5,165,402 4,642,697

Deactivated subscribers (1,939,726) (1,858,962) (3,996,750) (3,616,059)

Net additions 715,762 622,042 1,168,652 1,026,638
------- ------- --------- ---------

Ending subscribers 25,068,988 22,919,462 25,068,988 22,919,462
========== ========== ========== ==========


Self-pay 20,297,736 18,670,966 20,297,736 18,670,966

Paid promotional 4,771,252 4,248,496 4,771,252 4,248,496

Ending subscribers 25,068,988 22,919,462 25,068,988 22,919,462
========== ========== ========== ==========


Self-pay 423,076 462,876 727,462 762,224

Paid promotional 292,686 159,166 441,190 264,414

Net additions 715,762 622,042 1,168,652 1,026,638
======= ======= ========= =========


Daily weighted average number of subscribers 24,651,268 22,553,702 24,331,646 22,272,282
========== ========== ========== ==========


Average self-pay monthly churn 1.7% 1.9% 1.8% 1.9%
=== === === ===


New vehicle consumer conversion rate 45% 45% 44% 45%
=== === === ===


ARPU $12.28 $11.97 $12.16 $11.87

SAC, per gross subscriber addition $52 $54 $51 $57


Glossary

Adjusted EBITDA - EBITDA is defined as net income before interest and investment income (loss); interest expense, net of amounts capitalized; income tax expense and depreciation and amortization. We adjust EBITDA to 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 of Sirius and XM, (ii) depreciation and amortization and (iii) share-based payment expense. The purchase price accounting adjustments include: (i) the elimination of deferred revenue associated with the investment in XM Canada, (ii) recognition of deferred subscriber revenues not recognized in purchase price accounting, and (iii) elimination of the benefit of deferred credits on executory contracts, which are primarily attributable to third party arrangements with an OEM and programming providers. We believe adjusted EBITDA is a useful measure of the underlying trend of our operating performance, which provides useful information about our business apart from the costs associated with our physical plant, capital structure and purchase price accounting. We believe investors find this non-GAAP financial measure useful when analyzing our results and comparing our operating performance to the performance of other communications, entertainment and media companies. We believe investors use current and projected adjusted EBITDA to estimate our current and prospective enterprise value and to make investment decisions. Because we fund and build-out our satellite radio system through the periodic raising and expenditure of large amounts of capital, our results of operations reflect significant charges for depreciation expense. The exclusion of depreciation and amortization expense is useful given significant variation in depreciation and amortization expense that can result from the potential variations in estimated useful lives, all of which can vary widely across different industries or among companies within the same industry. We also believe the exclusion of share-based payment expense is useful given the significant variation in expense that can result from changes in the fair value as determined using the Black-Scholes-Merton model which varies based on assumptions used for the expected life, expected stock price volatility and risk-free interest rates.

Adjusted EBITDA has certain limitations in that it does not take into account the impact to our statements of comprehensive income of certain expenses, including share-based payment expense and certain purchase price accounting for the merger of Sirius and XM. We endeavor to compensate for the limitations of the non-GAAP measure presented by also providing the comparable GAAP measure with equal or greater prominence and descriptions of the reconciling items, including quantifying such items, to derive the Non-GAAP measure. Investors that wish to compare and evaluate our operating results after giving effect for these costs, should refer to net income as disclosed in our consolidated statements of comprehensive income. Since adjusted EBITDA is a non-GAAP financial performance measure, our calculation of adjusted EBITDA may be susceptible to varying calculations; may not be comparable to other similarly titled measures of other companies; and should not be considered in isolation, as a substitute for, or superior to measures of financial performance prepared in accordance with GAAP. The reconciliation of net income to the adjusted EBITDA is calculated as follows (in thousands):









Unaudited
---------

For the Three Months Ended June For the Six Months Ended
30, June 30,
-------------------------------- ------------------------

2013 2012 2013 2012
---- ---- ---- ----


Net income (GAAP): $125,522 $3,134,170 $249,124 $3,241,944

Add back items excluded from Adjusted EBITDA:

Purchase price accounting adjustments:

Revenues 1,813 1,867 3,626 3,747

Operating expenses (69,479) (73,423) (137,889) (147,449)

Share-based payment expense (GAAP) 15,494 13,917 30,012 28,869

Depreciation and amortization (GAAP) 67,415 66,793 134,433 132,910

Interest expense, net of amounts capitalized (GAAP) 49,728 72,770 95,902 149,742

Loss on extinguishment of debt and credit facilities, 16,377 15,650 16,377 25,621
net (GAAP)

Interest and investment (income) loss (GAAP) (294) 1,728 (1,932) 2,871

Other (income) loss (GAAP) (256) 173 (502) 749

Income tax expense (benefit) (GAAP) 76,659 (2,996,549) 155,699 (2,993,747)

Adjusted EBITDA $282,979 $237,096 $544,850 $445,257
======== ======== ======== ========






Adjusted Revenues and Operating Expenses - We define this non-GAAP financial measure as our actual revenues and operating expenses adjusted to exclude the impact of certain purchase price accounting adjustments and share-based payment expense. We use this non-GAAP financial measure to manage our business, set operational goals and as a basis for determining performance-based compensation for our employees. The following tables reconcile our actual revenues and operating expenses to our adjusted revenues and operating expenses for the three and six months ended June 30, 2013 and 2012:








Unaudited For the Three Months Ended June 30, 2013
--------------------------------------------------

(in thousands) As Reported Purchase Price Accounting Adjustments Allocation of Adjusted

Share-based

Payment Expense
---


Revenue:

Subscriber revenue $814,718 $ - $ - $814,718

Advertising revenue 21,757 - - 21,757

Equipment revenue 18,443 - - 18,443

Other revenue 85,192 1,813 - 87,005

Total revenue $940,110 $1,813 $ - $941,923
======== ====== ============================= ========

Operating expenses

Cost of services:

Revenue share and royalties $155,859 $40,831 $ - $196,690

Programming and content 70,381 2,478 (1,639) 71,220

Customer service and billing 80,290 - (511) 79,779

Satellite and transmission 19,493 - (827) 18,666

Cost of equipment 5,442 - - 5,442

Subscriber acquisition costs 129,992 22,017 - 152,009

Sales and marketing 68,058 4,153 (3,182) 69,029

Engineering, design and development 15,052 - (1,634) 13,418

General and administrative 60,392 - (7,701) 52,691

Depreciation and amortization (a) 67,415 - - 67,415

Share-based payment expense - - 15,494 15,494

Total operating expenses $672,374 $69,479 $ - $741,853
======== ======= ============================= ========


(a) Purchase price accounting adjustments included above exclude the incremental depreciation and amortization associated with the $785,000 stepped up basis in property, equipment and intangible assets as a result of the
merger of Sirius and XM. The increased depreciation and amortization for the three months ended June 30, 2013 was $12,000.









Unaudited For the Three Months Ended June 30, 2012
--------------------------------------------------

(in thousands) As Reported Purchase Price Accounting Adjustments Allocation of Adjusted

Share-based

Payment Expense
---


Revenue:

Subscriber revenue $730,285 $54 $ - $730,339

Advertising revenue 20,786 - - 20,786

Equipment revenue 16,417 - - 16,417

Other revenue 70,055 1,813 - 71,868

Total revenue $837,543 $1,867 $ - $839,410
======== ====== ============================= ========

Operating expenses

Cost of services:

Revenue share and royalties $135,426 $36,024 $ - $171,450

Programming and content 65,169 10,431 (1,231) 74,369

Customer service and billing 68,679 - (388) 68,291

Satellite and transmission 17,551 - (688) 16,863

Cost of equipment 7,150 - - 7,150

Subscriber acquisition costs 119,475 23,530 - 143,005

Sales and marketing 57,422 3,438 (2,053) 58,807

Engineering, design and development 6,272 - (1,282) 4,990

General and administrative 65,664 - (8,275) 57,389

Depreciation and amortization (a) 66,793 - - 66,793

Share-based payment expense - - 13,917 13,917

Total operating expenses $609,601 $73,423 $ - $683,024
======== ======= ============================= ========


(a) Purchase price accounting adjustments included above exclude the incremental depreciation and amortization associated with the $785,000 stepped up basis in property, equipment and intangible assets as a result of the
merger of Sirius and XM. The increased depreciation and amortization for the three months ended June 30, 2012 was $14,000.









Unaudited For the Six Months Ended June 30, 2013
------------------------------------------------

(in thousands) As Reported Purchase Price Accounting Adjustments Allocation of Adjusted

Share-based

Payment Expense
---


Revenue:

Subscriber revenue $1,598,060 $ - $ - $1,598,060

Advertising revenue 41,968 - - 41,968

Equipment revenue 36,599 - - 36,599

Other revenue 160,881 3,626 - 164,507

Total revenue $1,837,508 $3,626 $ - $1,841,134
========== ====== ============================= ==========

Operating expenses

Cost of services:

Revenue share and royalties $304,390 $80,592 $ - $384,982

Programming and content 144,991 4,956 (3,281) 146,666

Customer service and billing 160,684 - (981) 159,703

Satellite and transmission 39,188 - (1,677) 37,511

Cost of equipment 12,469 - - 12,469

Subscriber acquisition costs 246,103 44,022 - 290,125

Sales and marketing 133,956 8,319 (6,243) 136,032

Engineering, design and development 29,894 - (3,281) 26,613

General and administrative 116,732 - (14,549) 102,183

Depreciation and amortization (a) 134,433 - - 134,433

Share-based payment expense - - 30,012 30,012

Total operating expenses $1,322,840 $137,889 $ - $1,460,729
========== ======== ============================= ==========


(a) Purchase price accounting adjustments included above exclude the incremental depreciation and amortization associated with the $785,000 stepped up basis in property, equipment and intangible assets as a result of the
merger of Sirius and XM. The increased depreciation and amortization for the six months ended June 30, 2013 was $25,000.






Unaudited For the Six Months Ended June 30, 2012
------------------------------------------------

(in thousands) As Reported Purchase Price Accounting Adjustments Allocation of Adjusted

Share-based

Payment Expense
---


Revenue:

Subscriber revenue $1,430,526 $121 $ - $1,430,647

Advertising revenue 39,456 - - 39,456

Equipment revenue 33,370 - - 33,370

Other revenue 138,912 3,626 - 142,538

Total revenue $1,642,264 $3,747 $ - $1,646,011
========== ====== =========================== ==========

Operating expenses

Cost of services:

Revenue share and royalties $267,537 $70,870 $ - $338,407

Programming and content 135,265 22,134 (2,606) 154,793

Customer service and billing 134,866 - (815) 134,051

Satellite and transmission 35,661 - (1,473) 34,188

Cost of equipment 12,956 - - 12,956

Subscriber acquisition costs 235,596 47,616 - 283,212

Sales and marketing 115,781 6,829 (4,413) 118,197

Engineering, design and development 18,962 - (2,714) 16,248

General and administrative 125,550 - (16,848) 108,702

Depreciation and amortization (a) 132,910 - - 132,910

Share-based payment expense - - 28,869 28,869

Total operating expenses $1,215,084 $147,449 $ - $1,362,533
========== ======== =========================== ==========


(a) Purchase price accounting adjustments included above exclude the incremental depreciation and amortization associated with the $785,000 stepped up basis in property, equipment and intangible assets as a result of
the merger of Sirius and XM. The increased depreciation and amortization for the six months ended June 30, 2012 was $28,000.




ARPU - is derived from total earned subscriber revenue, 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. Purchase price accounting adjustments include the recognition of deferred subscriber revenues not recognized in purchase price accounting associated with the merger of Sirius and XM. ARPU is calculated as follows (in thousands, except for subscriber and per subscriber amounts):








Unaudited
---------

For the Three Months Ended June For the Six Months Ended June
30, 30,
-------------------------------- ------------------------------

2013 2012 2013 2012
---- ---- ---- ----


Subscriber revenue (GAAP) $814,718 $730,285 $1,598,060 $1,430,526

Add: advertising revenue (GAAP) 21,757 20,786 41,968 39,456

Add: other subscription-related revenue (GAAP) 71,648 58,753 135,785 116,474

Add: purchase price accounting adjustments - 54 - 121

$908,123 $809,878 $1,775,813 $1,586,577
======== ======== ========== ==========


Daily weighted average number of subscribers 24,651,268 22,553,702 24,331,646 22,272,282
========== ========== ========== ==========


ARPU $12.28 $11.97 $12.16 $11.87
====== ====== ====== ======




Average self-pay monthly churn - is defined as the monthly average of self-pay deactivations for the period divided by the average number of self-pay subscribers for the period.

Customer service and billing expenses, per average subscriber - is derived from total customer service and billing expenses, excluding share-based payment expense, divided by the number of months in the period, divided by the daily weighted average number of subscribers for the period. We believe the exclusion of share-based payment expense in our calculation of customer service and billing expenses, per average subscriber, is useful 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. 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 June For the Six Months Ended June
30, 30,
-------------------------------- ------------------------------

2013 2012 2013 2012
---- ---- ---- ----


Customer service and billing expenses (GAAP) $80,290 $68,679 $160,684 $134,866

Less: share-based payment expense (511) (388) (981) (815)

$79,779 $68,291 $159,703 $134,051
======= ======= ======== ========


Daily weighted average number of subscribers 24,651,268 22,553,702 24,331,646 22,272,282
========== ========== ========== ==========


Customer service and billing expenses, per average subscriber $1.08 $1.01 $1.09 $1.00
===== ===== ===== =====


Free cash flow - is derived from cash flow provided by operating activities, capital expenditures and restricted and other investment activity. Free cash flow is calculated as follows (in thousands):






Unaudited
---------

For the Three Months Ended June For the Six Months Ended June
30, 30,
-------------------------------- ------------------------------

2013 2012 2013 2012
---- ---- ---- ----

Cash Flow information

Net cash provided by operating activities $273,106 $253,775 $442,021 $293,723

Net cash used in investing activities $(36,546) $(23,757) $(62,980) $(48,944)

Net cash provided by (used in) financing activities $208,482 $(108,264) $(248,217) $(150,439)

Free Cash Flow

Net cash provided by operating activities $273,106 $253,775 $442,021 $293,723

Additions to property and equipment (36,546) (23,757) (62,980) (48,944)

Free cash flow $236,560 $230,018 $379,041 $244,779
======== ======== ======== ========






New vehicle consumer conversion rate - is defined as 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. 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. The metric excludes rental and fleet vehicles.

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




Unaudited
---------

For the Three Months Ended June For the Six Months Ended
30, June 30,
-------------------------------- ------------------------

2013 2012 2013 2012
---- ---- ---- ----


Subscriber acquisition costs (GAAP) $129,992 $119,475 $246,103 $235,596

Less: margin from direct sales of radios and accessories (GAAP) (13,001) (9,267) (24,130) (20,414)

Add: purchase price accounting adjustments 22,017 23,530 44,022 47,616

$139,008 $133,738 $265,995 $262,798
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Gross subscriber additions 2,655,488 2,481,004 5,165,402 4,642,697
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SAC, per gross subscriber addition $52 $54 $51 $57
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About Sirius XM Radio



Sirius XM Radio Inc. is the world's largest radio broadcaster measured by revenue and has more than 25 million subscribers. SiriusXM creates and broadcasts commercial-free music; premier sports talk and live events; comedy; news; exclusive talk and entertainment; and the most comprehensive Latin music, sports and talk programming in radio. SiriusXM is available in vehicles from every major car company in the U.S., from retailers nationwide, and online at siriusxm.com. SiriusXM programming is also available through the SiriusXM Internet Radio App for Android, Apple, and BlackBerry smartphones and other connected devices. SiriusXM also holds a minority interest in SiriusXM Canada which has more than 2 million subscribers.

On social media, join the SiriusXM community on Facebook, facebook.com/siriusxm, Twitter, twitter.com/siriusxm, Instagram, instagram.com/siriusxm, and YouTube at youtube.com/siriusxm.

This communication contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about future financial and operating results, our plans, objectives, expectations and intentions with respect to future operations, products and services; and other statements identified by words such as "will likely result," "are expected to," "will continue," "is anticipated," "estimated," "believe," "intend," "plan," "projection," "outlook" or words of similar meaning. Such forward-looking statements are based upon the current beliefs and expectations of our management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are difficult to predict and generally beyond our control. Actual results may differ materially from the results anticipated in these forward-looking statements.



The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements: our competitive position versus other forms of radio and audio services; our dependence upon automakers; general economic conditions; failure of our satellites, which, in most cases, are not insured; our ability to attract and retain subscribers at a profitable level; royalties we pay for music rights; the unfavorable outcome of pending or future litigation; rapid technological and industry change; failure of third parties to perform; changes in consumer protection laws and their enforcement; and our substantial indebtedness. Additional factors that could cause our results to differ materially from those described in the forward-looking statements can be found in our Annual Report on Form 10-K for the year ended December 31, 2012, which is filed with the Securities and Exchange Commission (the "SEC") and available at the SEC's Internet site (http://www.sec.gov). The information set forth herein speaks only as of the date hereof, and we disclaim any intention or obligation to update any forward looking statements as a result of developments occurring after the date of this communication.





E-SIRI

Contact Information for Investors and Financial Media:

Investors:

Hooper Stevens

212 901 6718
hooper.stevens@siriusxm.com

Media:

Patrick Reilly

212 901 6646
patrick.reilly@siriusxm.com

SOURCE Sirius XM Radio

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

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


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