SiriusXM Reports Fourth Quarter and Full-Year 2014 Results

SiriusXM Reports Fourth Quarter and Full-Year 2014 Results

NEW YORK, Feb. 5, 2015 /PRNewswire/ --


-- 2014 Revenue Climbs 10% to $4.18 Billion
-- Net Income Increases 31% to $493 Million in 2014
-- Record Adjusted EBITDA of $1.47 Billion in 2014, up 26%
-- 2014 Free Cash Flow Reaches Record $1.16 Billion, up 25%
-- $2.5 Billion of Stock Repurchased in 2014
SiriusXM today announced fourth quarter and full-year 2014 operating and financial results, including record revenue of $1.09 billion and $4.18 billion for the fourth quarter and full-year, respectively, up 9% and 10% versus the prior year periods.

http://photos.prnewswire.com/prnvar/20101014/NY82093LOGO

Net income of $143 million and $493 million in the fourth quarter and full-year 2014, respectively, compared to $65 million and $377 million in the fourth quarter and full-year 2013. Net income per diluted common share was $0.03 and $0.08, respectively, in the fourth quarter and full-year 2014, versus $0.01 and $0.06 in the fourth quarter and full-year 2013. Adjusted EBITDA was $381 million and $1.47 billion, respectively, in the fourth quarter and full-year, up 17% and 26% versus the prior year periods.

"As our results demonstrate, SiriusXM had a great year by delivering to subscribers new and exciting music, sports, and talk programming; executing on our growth plan; and driving 36% growth in free cash flow per diluted share, all while investing in the future of the connected car," said Jim Meyer, Chief Executive Officer, SiriusXM.

"We have once again set ambitious targets for 2015 to grow our subscriber base, revenue, adjusted EBITDA, and free cash flow to new, record-high levels. I'm confident in our ability to be creative and innovative as the leader in audio entertainment, making our superior service an even better experience for our subscribers in 2015," added Meyer.

FOURTH QUARTER 2014 HIGHLIGHTS


-- Strong fourth quarter net subscriber gains. SiriusXM recorded 576,689
net new subscribers in the fourth quarter, marking the largest
fourth-quarter increase since 2007. Self-pay net subscriber additions
were 508,032 in the fourth quarter of 2014 compared to 411,484 in the
fourth quarter of 2013.
-- Record high fourth quarter adjusted EBITDA. Adjusted EBITDA of $381
million in the fourth quarter of 2014 was the highest quarterly amount
in the company's history, an increase of 17% over the fourth quarter
2013.
-- Record free cash flow per diluted share. Free cash flow reached a fourth
quarter record of $331 million, while free cash flow per diluted share
reached an all-time high of 5.9 cents in the fourth quarter of 2014, up
20% from the fourth quarter of 2013.
FULL-YEAR 2014 HIGHLIGHTS


-- Full-year subscriber gains exceed targets. SiriusXM reported 2014 total
and self-pay net subscriber additions, respectively, of 1,751,777 and
1,440,821, each ahead of the company's original full-year guidance of
1,250,000. The company ended 2014 with 27.3 million total paying
subscribers and 22.5 million self-pay subscribers, each up 7% from the
end of 2013.
-- Share buybacks reach $2.5 billion in 2014. The company returned $2.5
billion to stockholders by repurchasing 739 million shares in 2014. As
of year-end, approximately $1.7 billion remained under the company's
existing $6 billion share repurchase authorization.
-- Record-high adjusted EBITDA and margin. Adjusted EBITDA grew 26% to a
record $1.47 billion in 2014 from $1.17 billion in 2013. Adjusted EBITDA
margin grew approximately 440 basis points to a record high 35.0%.
-- Rapid expansion of free cash flow. SiriusXM reported $1.16 billion of
free cash flow in 2014, up 25% from $927 million in 2013. The company
reported 19.7 cents of free cash flow per diluted share in 2014, up 36%
from 14.5 cents per diluted share in 2013.
"Our repurchases of 739 million shares in 2014 represented approximately 12% of the shares outstanding at the beginning of last year. Even as we returned $2.5 billion to our stockholders, SiriusXM's leverage remained steady at about 3.1 times EBITDA, a result of rapid growth in adjusted EBITDA and the conversion of our 7% Exchangeable Notes into equity in December. In the two years since we began our capital return program with a special dividend, we have paid our shareholders over $4.8 billion and retired more than 1.3 billion shares," noted David Frear, Chief Financial Officer, SiriusXM.

2015 GUIDANCE

The company also reiterated its 2015 guidance, originally given on January 7, 2015, for net subscriber additions, revenue, adjusted EBITDA, and free cash flow:


-- Net subscriber additions of approximately 1.2 million,
-- Revenue of approximately $4.4 billion,
-- Adjusted EBITDA of approximately $1.6 billion, and
-- Free cash flow of approximately $1.25 billion.
FOURTH QUARTER AND FULL-YEAR 2014 RESULTS



SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


For the Three Months Ended December For the Twelve Months Ended December
31, 31,
------------------------------------ -------------------------------------

(in thousands, except per
share data) 2014 2013 2014 2013
---- ---- ---- ----

(Unaudited) (Unaudited)

Revenue:

Subscriber revenue $922,192 $852,547 $3,554,302 $3,284,660

Advertising revenue 27,970 25,402 100,982 89,288

Equipment revenue 29,938 25,985 104,661 80,573

Other revenue 110,852 96,144 421,150 344,574
------- ------ ------- -------

Total revenue 1,090,952 1,000,078 4,181,095 3,799,095

Operating expenses:

Cost of services:

Revenue share and
royalties 210,089 210,625 810,028 677,642

Programming and content 77,953 73,010 297,313 290,323

Customer service and
billing 96,411 83,749 370,585 320,755

Satellite and
transmission 21,567 20,251 86,013 79,292

Cost of equipment 15,078 8,669 44,397 26,478

Subscriber acquisition
costs 126,257 124,050 493,464 495,610

Sales and marketing 98,488 81,430 336,480 291,024

Engineering, design and
development 15,107 15,068 62,784 57,969

General and
administrative 69,943 77,522 293,938 262,135

Depreciation and
amortization 66,402 60,348 266,423 253,314

Total operating expenses 797,295 754,722 3,061,425 2,754,542
------- ------- --------- ---------

Income from operations 293,657 245,356 1,119,670 1,044,553

Other income (expense):

Interest expense, net of
amounts capitalized (71,981) (54,140) (269,010) (204,671)

Loss on extinguishment of
debt and credit
facilities, net - (66,229) - (190,577)

Interest and investment
income 5,910 3,328 15,498 6,976

Loss on change in value
of derivatives - (20,393) (34,485) (20,393)

Other income (loss) 467 295 (887) 1,204

Total other expense (65,604) (137,139) (288,884) (407,461)
------- -------- -------- --------

Income before income
taxes 228,053 108,217 830,786 637,092

Income tax expense (84,931) (43,020) (337,545) (259,877)

Net income $143,122 $65,197 $493,241 $377,215
======== ======= ======== ========

Foreign currency
translation adjustment,
net of tax (114) (136) (94) (428)

Total comprehensive
income $143,008 $65,061 $493,147 $376,787
======== ======= ======== ========

Net income per common share:

Basic $0.03 $0.01 $0.09 $0.06
===== ===== ===== =====

Diluted $0.03 $0.01 $0.08 $0.06
===== ===== ===== =====

Weighted average common shares outstanding:

Basic 5,577,325 6,113,889 5,788,944 6,227,646
========= ========= ========= =========

Diluted 5,643,839 6,203,674 5,862,020 6,384,791
========= ========= ========= =========






SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

As of December 31, As of December 31,
------------------ ------------------

2014 2013
---- ----

(in thousands, except share
and per share data)

ASSETS

Current assets:

Cash and cash equivalents $147,724 $134,805

Receivables, net 220,579 192,912

Inventory, net 19,397 13,863

Prepaid expenses 116,336 110,530

Related party current assets 4,344 9,145

Deferred tax asset 1,038,603 937,598

Other current assets 2,763 20,160
----- ------

Total current assets 1,549,746 1,419,013

Property and equipment, net 1,510,112 1,594,574

Long-term restricted
investments 5,922 5,718

Deferred financing fees, net 12,021 12,604

Intangible assets, net 2,645,046 2,700,062

Goodwill 2,205,107 2,204,553

Related party long-term assets 3,000 30,164

Long-term deferred tax asset 437,736 868,057

Other long-term assets 6,819 10,035

Total assets $8,375,509 $8,844,780
========== ==========

LIABILITIES AND STOCKHOLDERS'
EQUITY

Current liabilities:

Accounts payable and accrued
expenses $587,755 $578,333

Accrued interest 80,440 42,085

Current portion of deferred
revenue 1,632,381 1,586,611

Current portion of deferred
credit on executory contracts 1,394 3,781

Current maturities of long-
term debt 7,482 496,815

Current maturities of long-
term related party debt - 10,959

Related party current
liabilities 4,340 20,320
----- ------

Total current liabilities 2,313,792 2,738,904

Deferred revenue 151,901 149,026

Deferred credit on executory
contracts - 1,394

Long-term debt 4,493,863 3,093,821

Related party long-term
liabilities 13,635 16,337

Other long-term liabilities 92,481 99,556

Total liabilities 7,065,672 6,099,038
--------- ---------

Stockholders' equity:

Preferred stock, undesignated,
par value $0.001 (liquidation
preference of $0.001 per
share); 50,000,000 shares
authorized and 0 shares
issued and outstanding at
December 31, 2014 and
December 31, 2013 - -

Common stock, par value
$0.001; 9,000,000,000 shares
authorized; 5,653,529,403 and
6,096,220,526 shares issued;
5,646,119,122 and
6,096,220,526 outstanding at
December 31, 2014 and
December 31, 2013,
respectively 5,653 6,096

Accumulated other
comprehensive loss, net of
tax (402) (308)

Additional paid-in capital 6,771,554 8,674,129

Treasury stock, at cost;
7,410,281 and 0 shares of
common stock at December 31,
2014 and December 31, 2013,
respectively (26,034) -

Accumulated deficit (5,440,934) (5,934,175)
---------- ----------

Total stockholders' equity 1,309,837 2,745,742
--------- ---------

Total liabilities and
stockholders' equity $8,375,509 $8,844,780
========== ==========






SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS


For the Years Ended December 31,
--------------------------------

(in thousands) 2014 2013
---- ----

Cash flows from operating activities:

Net income $493,241 $377,215

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

Depreciation and amortization 266,423 253,314

Non-cash interest expense,
net of amortization of
premium 21,039 21,698

Provision for doubtful
accounts 44,961 39,016

Amortization of deferred
income related to equity
method investment (2,776) (2,776)

Loss on extinguishment of debt
and credit facilities, net - 190,577

Gain on unconsolidated entity
investments, net (5,547) (5,865)

Dividend received from
unconsolidated entity
investment 17,019 22,065

Loss on disposal of assets 220 351

Loss on change in value of
derivatives 34,485 20,393

Share-based payment expense 78,212 68,876

Deferred income taxes 327,461 259,787

Other non-cash purchase price
adjustments (3,781) (207,854)

Changes in operating assets and liabilities:

Receivables (72,628) (15,245)

Inventory (5,534) 11,474

Related party assets (4,097) 2,031

Prepaid expenses and other
current assets (1,195) 16,788

Other long-term assets 3,173 2,973

Accounts payable and accrued
expenses (17,191) (44,009)

Accrued interest 38,355 8,131

Deferred revenue 48,645 73,593

Related party liabilities (206) (1,991)

Other long-term liabilities (7,035) 12,290

Net cash provided by operating
activities 1,253,244 1,102,832
--------- ---------


Cash flows from investing activities:

Additions to property and
equipment (121,646) (173,617)

Purchases of restricted and
other investments - (1,719)

Acquisition of business, net
of cash acquired 1,144 (525,352)

Return of capital from
investment in unconsolidated
entity 24,178 -

Net cash used in investing
activities (96,324) (700,688)
------- --------


Cash flows from financing activities:

Proceeds from exercise of
stock options 331 21,968

Taxes paid in lieu of shares
issued for stock-based
compensation (37,318) (46,342)

Proceeds from long-term
borrowings and revolving
credit facility, net of costs 2,406,205 3,156,063

Payment of premiums on
redemption of debt - (175,453)

Repayment of long-term
borrowings and revolving
credit facility (1,016,420) (1,782,160)

Repayment of related party
long-term borrowings - (200,000)

Common stock repurchased and
retired (2,496,799) (1,762,360)

Net cash used in financing
activities (1,144,001) (788,284)
---------- --------

Net increase (decrease) in
cash and cash equivalents 12,919 (386,140)

Cash and cash equivalents at
beginning of period 134,805 520,945

Cash and cash equivalents at
end of period $147,724 $134,805
======== ========


Key Operating Metrics

The following table contains our key operating metrics for the three and twelve months ended December 31, 2014 and 2013, respectively. Subscribers to our connected vehicle services are not included in our subscriber count:



Unaudited
---------

(in thousands,
except
subscriber, per
subscriber and
per installation
amounts) For the Three Months Ended December 31, For the Twelve Months Ended December 31,
--------------------------------------- ----------------------------------------

2014 2013 2014 2013
---- ---- ---- ----


Self-pay
subscribers 22,522,638 21,081,817 22,522,638 21,081,817

Paid promotional
subscribers 4,788,449 4,477,493 4,788,449 4,477,493

Ending
subscribers 27,311,087 25,559,310 27,311,087 25,559,310
========== ========== ========== ==========


Self-pay
subscribers 508,032 411,484 1,440,821 1,511,543

Paid promotional
subscribers 68,657 (434,240) 310,956 147,431

Net additions 576,689 (22,756) 1,751,777 1,658,974
======= ======= ========= =========


Daily weighted
average number
of subscribers 27,021,501 25,596,580 26,283,785 24,886,300
========== ========== ========== ==========


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


New vehicle
consumer
conversion rate 40% 42% 41% 44%
=== === === ===


ARPU $12.49 $12.31 $12.38 $12.23

SAC, per
installation $33 $34 $34 $43

Customer service
and billing
expenses, per
average
subscriber $1.07 $1.04 $1.07 $1.06

Free cash flow $330,674 $303,193 $1,155,776 $927,496

Adjusted EBITDA $381,306 $325,551 $1,467,775 $1,166,140


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 exclude the impact of other income and expense, loss on extinguishment of debt, loss on change in value of derivatives as well as certain other charges discussed below. This measure is one of the primary Non-GAAP financial measures on which we (i) evaluate the performance of our 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 share-based payment expense is not directly related to the operational conditions of our business.

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 December For the Twelve Months Ended December
31, 31,
------------------------------------ ------------------------------------

2014 2013 2014 2013
---- ---- ---- ----


Net income (GAAP): $143,122 $65,197 $493,241 $377,215

Add back items excluded
from Adjusted EBITDA:

Purchase price accounting
adjustments:

Revenues 1,813 1,813 7,251 7,251

Operating expenses (946) (1,068) (3,781) (207,854)

Share-based payment
expense (GAAP) 20,380 19,102 78,212 68,876

Depreciation and
amortization (GAAP) 66,402 60,348 266,423 253,314

Interest expense, net of
amounts capitalized
(GAAP) 71,981 54,140 269,010 204,671

Loss on extinguishment of
debt and credit
facilities, net (GAAP) - 66,229 - 190,577

Interest and investment
income (GAAP) (5,910) (3,328) (15,498) (6,976)

Loss on change in value
of derivatives (GAAP) - 20,393 34,485 20,393

Other (income) loss
(GAAP) (467) (295) 887 (1,204)

Income tax expense (GAAP) 84,931 43,020 337,545 259,877

Adjusted EBITDA $381,306 $325,551 $1,467,775 $1,166,140
======== ======== ========== ==========


Adjusted Revenues and Operating Expenses - We define this Non-GAAP financial measure as our actual revenues and operating expenses adjusted to exclude the impact of certain purchase price accounting adjustments from the merger of Sirius and XM and share-based payment expense. We use this Non-GAAP financial measure to manage our business, to set operational goals and as a basis for determining performance-based compensation for our employees. The following tables reconcile our actual revenues and operating expenses to our adjusted revenues and operating expenses for the three and twelve months ended December 31, 2014 and 2013:



Unaudited For the Three Months Ended December 31, 2014
------------------------------------------------------

(in thousands) As Reported Purchase Price Accounting Adjustments Allocation of Share-based Payment Expense Adjusted
----------- ------------------------------------- ----------------------------------------- --------


Revenue:

Subscriber revenue $922,192 $ - $ - $922,192

Advertising revenue 27,970 - - 27,970

Equipment revenue 29,938 - - 29,938

Other revenue 110,852 1,813 - 112,665

Total revenue $1,090,952 $1,813 $ - $1,092,765
========== ====== =========================== ==========

Operating expenses

Cost of services:

Revenue share and royalties $210,089 $ - $ - $210,089

Programming and content 77,953 946 (2,277) 76,622

Customer service and billing 96,411 - (748) 95,663

Satellite and transmission 21,567 - (1,004) 20,563

Cost of equipment 15,078 - - 15,078

Subscriber acquisition costs 126,257 - - 126,257

Sales and marketing 98,488 - (4,216) 94,272

Engineering, design and
development 15,107 - (2,253) 12,854

General and administrative 69,943 - (9,882) 60,061

Depreciation and amortization
(a) 66,402 - - 66,402

Share-based payment expense - - 20,380 20,380

Total operating expenses $797,295 $946 $ - $798,241
======== ==== =========================== ========


(a) Purchase price accounting adjustments included above exclude the incremental depreciation and amortization associated with the $785,000 stepped up basis in property, equipment and intangible assets as a result of the merger of Sirius
and XM. The increased depreciation and amortization for the three months ended December 31, 2014 was $9,000.






Unaudited For the Three Months Ended December 31, 2013
------------------------------------------------------

(in thousands) As Reported Purchase Price Accounting Adjustments Allocation of Share-based Payment Expense Adjusted
----------- ------------------------------------- ----------------------------------------- --------


Revenue:

Subscriber revenue $852,547 $ - $ - $852,547

Advertising revenue 25,402 - - 25,402

Equipment revenue 25,985 - - 25,985

Other revenue 96,144 1,813 - 97,957

Total revenue $1,000,078 $1,813 $ - $1,001,891
========== ====== =========================== ==========

Operating expenses

Cost of services:

Revenue share and royalties $210,625 $ - $ - $210,625

Programming and content 73,010 1,068 (2,071) 72,007

Customer service and billing 83,749 - (591) 83,158

Satellite and transmission 20,251 - (961) 19,290

Cost of equipment 8,669 - - 8,669

Subscriber acquisition costs 124,050 - - 124,050

Sales and marketing 81,430 - (4,678) 76,752

Engineering, design and
development 15,068 - (1,947) 13,121

General and administrative 77,522 - (8,854) 68,668

Depreciation and amortization
(a) 60,348 - - 60,348

Share-based payment expense - - 19,102 19,102

Total operating expenses $754,722 $1,068 $ - $755,790
======== ====== =========================== ========


(a) Purchase price accounting adjustments included above exclude the incremental depreciation and amortization associated with the $785,000 stepped up basis in property, equipment and intangible assets as a result of the merger of Sirius
and XM. The increased depreciation and amortization for the three months ended December 31, 2013 was $10,000.






Unaudited For the Twelve Months Ended December 31, 2014
-------------------------------------------------------

(in thousands) As Reported Purchase Price Accounting Adjustments Allocation of Share-based Payment Expense Adjusted
----------- ------------------------------------- ----------------------------------------- --------


Revenue:

Subscriber revenue $3,554,302 $ - $ - $3,554,302

Advertising revenue 100,982 - - 100,982

Equipment revenue 104,661 - - 104,661

Other revenue 421,150 7,251 - 428,401

Total revenue $4,181,095 $7,251 $ - $4,188,346
========== ====== =========================== ==========

Operating expenses

Cost of services:

Revenue share and royalties $810,028 $ - $ - $810,028

Programming and content 297,313 3,781 (9,180) 291,914

Customer service and billing 370,585 - (2,780) 367,805

Satellite and transmission 86,013 - (4,091) 81,922

Cost of equipment 44,397 - - 44,397

Subscriber acquisition costs 493,464 - - 493,464

Sales and marketing 336,480 - (15,454) 321,026

Engineering, design and
development 62,784 - (8,675) 54,109

General and administrative 293,938 - (38,032) 255,906

Depreciation and amortization
(a) 266,423 - - 266,423

Share-based payment expense - - 78,212 78,212

Total operating expenses $3,061,425 $3,781 $ - $3,065,206
========== ====== =========================== ==========


(a) Purchase price accounting adjustments included above exclude the incremental depreciation and amortization associated with the $785,000 stepped up basis in property, equipment and intangible assets as a result of the merger of Sirius
and XM. The increased depreciation and amortization for the year ended December 31, 2014 was $39,000.






Unaudited For the Twelve Months Ended December 31, 2013
-------------------------------------------------------

(in thousands) As Reported Purchase Price Accounting Adjustments Allocation of Share-based Payment Expense Adjusted
----------- ------------------------------------- ----------------------------------------- --------


Revenue:

Subscriber revenue $3,284,660 $ - $ - $3,284,660

Advertising revenue 89,288 - - 89,288

Equipment revenue 80,573 - - 80,573

Other revenue 344,574 7,251 - 351,825

Total revenue $3,799,095 $7,251 $ - $3,806,346
========== ====== =========================== ==========

Operating expenses

Cost of services:

Revenue share and royalties $677,642 $122,534 $ - $800,176

Programming and content 290,323 8,033 (7,584) 290,772

Customer service and billing 320,755 - (2,219) 318,536

Satellite and transmission 79,292 - (3,714) 75,578

Cost of equipment 26,478 - - 26,478

Subscriber acquisition costs 495,610 64,365 - 559,975

Sales and marketing 291,024 12,922 (14,792) 289,154

Engineering, design and
development 57,969 - (7,405) 50,564

General and administrative 262,135 - (33,162) 228,973

Depreciation and amortization
(a) 253,314 - - 253,314

Share-based payment expense - - 68,876 68,876

Total operating expenses $2,754,542 $207,854 $ - $2,962,396
========== ======== =========================== ==========


(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 year ended December 31, 2013 was $47,000.


Adjusted Cash Operating Expenses - We define this Non-GAAP financial measure as our actual operating expenses adjusted to exclude the impact of certain purchase price accounting adjustments from the merger of Sirius and XM, depreciation and amortization expense, and share-based payment expense. The following table reconciles our actual operating expenses to our adjusted cash operating expenses for the three and twelve months ended December 31, 2014 and 2013:



Unaudited
---------

For the Three Months Ended December For the Twelve Months Ended December
31, 31,
------------------------------------ -------------------------------------

2014 2013 2014 2013
---- ---- ---- ----


Operating expenses
(GAAP): $797,295 $754,722 $3,061,425 $2,754,542

Items excluded from
adjusted cash
operating expenses:

Purchase price
accounting
adjustments 946 1,068 3,781 207,854

Share-based payment
expense (GAAP) (20,380) (19,102) (78,212) (68,876)

Depreciation and
amortization (GAAP) (66,402) (60,348) (266,423) (253,314)
------- ------- -------- --------

Adjusted cash
operating expenses $711,459 $676,340 $2,720,571 $2,640,206
======== ======== ========== ==========


ARPU - is derived from total earned subscriber revenue, advertising revenue and other subscription-related revenue, excluding revenue associated with our connected vehicle business, 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. ARPU is calculated as follows (in thousands, except for subscriber and per subscriber amounts):



Unaudited
---------

For the Three Months Ended For the Twelve Months Ended
December 31, December 31,
--------------------------- ----------------------------

2014 2013 2014 2013
---- ---- ---- ----


Subscriber
revenue,
excluding
connected
vehicle (GAAP) $897,308 $840,605 $3,466,050 $3,272,718

Add: advertising
revenue (GAAP) 27,970 25,402 100,982 89,288

Add: other
subscription-
related revenue
(GAAP) 87,270 79,111 336,408 290,895

$1,012,548 $945,118 $3,903,440 $3,652,901
========== ======== ========== ==========


Daily weighted
average number
of subscribers 27,021,501 25,596,580 26,283,785 24,886,300
========== ========== ========== ==========


ARPU $12.49 $12.31 $12.38 $12.23
====== ====== ====== ======


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

Customer service and billing expenses, per average subscriber - is derived from total customer service and billing expenses, excluding connected vehicle customer service and billing expenses and share-based payment expense, divided by the number of months in the period, divided by the daily weighted average number of subscribers for the period. We believe the exclusion of share-based payment expense in our calculation of customer service and billing expenses, per average subscriber, is useful as share-based payment expense is not directly related to the operational conditions that give rise to variations in the components of our customer service and billing expenses. Customer service and billing expenses, per average subscriber, is calculated as follows (in thousands, except for subscriber and per subscriber amounts):



Unaudited
---------

For the Three Months Ended For the Twelve Months Ended
December 31, December 31,
--------------------------- ----------------------------

2014 2013 2014 2013
---- ---- ---- ----


Customer
service and
billing
expenses,
excluding
connected
vehicle (GAAP) $87,417 $80,826 $340,094 $317,832

Less: share-
based payment
expense (GAAP) (748) (591) (2,780) (2,219)

$86,669 $80,235 $337,314 $315,613
======= ======= ======== ========


Daily weighted
average number
of subscribers 27,021,501 25,596,580 26,283,785 24,886,300
========== ========== ========== ==========


Customer
service and
billing
expenses, per
average
subscriber $1.07 $1.04 $1.07 $1.06
===== ===== ===== =====


Free cash flow and free cash flow per diluted share - are derived from cash flow provided by operating activities, capital expenditures and restricted and other investment activity. The calculation for free cash flow and free cash flow per diluted share are as follows (in thousands, except share and per share data):



Unaudited
---------

For the Three Months Ended December For the Twelve Months Ended December
31, 31,
------------------------------------ -------------------------------------

2014 2013 2014 2013
---- ---- ---- ----


Cash Flow information

Net cash provided by
operating activities $365,076 $358,575 $1,253,244 $1,102,832

Net cash used in investing
activities $(34,402) $(580,734) $(96,324) $(700,688)

Net cash used in financing
activities $(286,535) $(359,820) $(1,144,001) $(788,284)

Free Cash Flow

Net cash provided by
operating activities $365,076 $358,575 $1,253,244 $1,102,832

Additions to property and
equipment (34,402) (55,382) (121,646) (173,617)

Purchases of restricted
and other investments - - - (1,719)

Return of capital from
investment in
unconsolidated entity - - 24,178 -

Free cash flow $330,674 $303,193 $1,155,776 $927,496
======== ======== ========== ========


Diluted weighted average
common shares outstanding 5,643,839 6,203,674 5,862,020 6,384,791
========= ========= ========= =========


Free cash flow per diluted
share $0.059 $0.049 $0.197 $0.145
====== ====== ====== ======
New vehicle consumer conversion rate - is defined as the percentage of owners and lessees of new vehicles that receive our satellite radio service and convert to become self-paying subscribers after the initial promotion period. At the time satellite radio enabled vehicles are sold or leased, the owners or lessees generally receive trial subscriptions ranging from three to twelve months. We measure conversion rate three months after the period in which the trial service ends. The metric excludes rental and fleet vehicles.

Subscriber acquisition cost, per installation - or SAC, per installation, is derived from subscriber acquisition costs and margins from the sale of radios and accessories, excluding purchase price accounting adjustments, divided by the number of satellite radio installations in new vehicles and shipments of aftermarket radios 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 installation, is calculated as follows (in thousands, except for installation amounts):



Unaudited
---------

For the Three Months Ended December For the Twelve Months Ended December
31, 31,
------------------------------------ -------------------------------------

2014 2013 2014 2013
---- ---- ---- ----


Subscriber
acquisition
costs (GAAP) $126,257 $124,050 $493,464 $495,610

Less: margin
from direct
sales of radios
and accessories
(GAAP) (14,860) (17,316) (60,264) (54,095)

Add: purchase
price
accounting
adjustments - - - 64,365

$111,397 $106,734 $433,200 $505,880
======== ======== ======== ========


Installations 3,391,422 3,107,237 12,787,537 11,765,078
========= ========= ========== ==========


SAC, per
installation $33 $34 $34 $43
=== === === ===
About SiriusXM

Sirius XM Holdings Inc. (NASDAQ: SIRI) is the world's largest radio broadcaster measured by revenue and has 27.3 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. and from retailers nationwide as well as at shop.siriusxm.com. SiriusXM programming is available through the SiriusXM Internet Radio App for smartphones and other connected devices as well as online at siriusxm.com. SiriusXM also provides premium traffic, weather, data and information services for subscribers in cars, trucks, RVs, boats and aircraft through SiriusXM Traffic(TM), SiriusXM Travel Link, NavTraffic®, NavWeather(TM), SiriusXM Aviation, SiriusXM Marine(TM), Sirius Marine Weather, XMWX Aviation(TM), and XMWX Marine(TM). SiriusXM holds a minority interest in SiriusXM Canada which has more than 2 million subscribers.

On social media, join the SiriusXM community on Facebook, Twitter, Instagram, and YouTube.

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

The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements: our competitive position versus other radio and audio entertainment providers; our ability to attract and retain subscribers, which is uncertain; our dependence upon the auto industry; general economic conditions; failure of our satellites, which, in most cases, are not insured; the interruption or failure of our information and communications systems; the security of the personal information about our customers; royalties we pay for music rights, which increase over time; the unfavorable outcome of pending or future litigation; our failure to realize benefits of acquisitions; rapid technological and industry change; failure of third parties to perform; changes in consumer protection laws and their enforcement; failure to comply with FCC requirements and other government regulations; and our 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, 2013, 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

Logo - http://photos.prnewswire.com/prnh/20101014/NY82093LOGO



SOURCE Sirius XM Holdings Inc.

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

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


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