UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Date of Report (Date of earliest event reported):
October 28, 2014 (October 28, 2014)
SIRIUS XM HOLDINGS INC.
(Exact Name of Registrant as Specified in Charter)
Delaware |
001-34295 |
38-3916511 |
(State or other Jurisdiction
of Incorporation) |
(Commission File Number) |
(I.R.S. Employer
Identification No.) |
1221 Avenue of the Americas, 36th Fl., New York, NY |
10020 |
(Address of Principal Executive Offices) |
(Zip Code) |
Registrant’s telephone number, including area
code: (212) 584-5100
Check the appropriate box below if the Form
8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
£ |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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£ |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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£ |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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£ |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02 | Results of Operations and Financial Condition |
On October 28, 2014, we reported our financial
and operating results for the three and nine months ended September 30, 2014. These results are discussed in the press release
attached hereto as Exhibit 99.1, which is incorporated by reference in its entirety.
Item 9.01 | Financial Statements and Exhibits |
(d) Exhibits.
The Exhibit Index attached hereto is incorporated
herein.
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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SIRIUS XM HOLDINGS INC. |
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By: |
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/s/ Patrick L. Donnelly |
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Patrick L. Donnelly |
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Executive Vice President, General |
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Counsel and Secretary |
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Dated: October 28, 2014
EXHIBITS
Exhibit |
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Description
of Exhibit |
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99.1 |
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Press Release dated October 28, 2014 |
Exhibit 99.1
SiriusXM Reports Third Quarter 2014 Results
|
· | Revenue
Increases
10%
to
a
Record
$1.1
Billion |
|
· | Net
Income
of $136
Million, Up
117% |
|
· | Adjusted
EBITDA
Climbed
29% to
a Record
$381 Million |
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· | Share
Repurchases
Total
Nearly
$2.1 Billion
Year-to-Date |
|
· | 2014
Subscriber,
Revenue
and Free
Cash Flow
Guidance
Raised |
NEW YORK – October 28, 2014 – SiriusXM today
reported its third quarter 2014 financial and operating results, including revenue of $1.057 billion, up 10% from $962 million
in the third quarter of 2013. Net income was $136 million, or $0.02 per diluted share, in the third quarter of 2014, an increase
of 117% from $63 million, or $0.01 per diluted share, in the third quarter of 2013.
Adjusted EBITDA climbed 29% to a record $381 million in the third
quarter of 2014 from $296 million in the third quarter of 2013.
“We are very pleased with the performance of SiriusXM in
the third quarter, and we are entering the fourth quarter with tremendous momentum. So far this year we have added nearly 1.2 million
subscribers, grown our Adjusted EBITDA margin by more than five percentage points, and increased free cash flow by 32%,”
said Jim Meyer, Chief Executive Officer, SiriusXM.
Additional third quarter 2014 financial and operating highlights:
| · | Strong
subscriber growth.
Net subscriber additions
in the third quarter were
432,817, bringing total
subscribers up nearly 5%
to 26.7 million. Self-pay
net subscriber additions
in the third quarter were
379,598, bringing the self-pay
subscriber base up nearly
7% to 22.0 million. Total
trials underway at the
end of the third quarter
of 2014 were approximately
7.4 million, the largest
in SiriusXM’s history,
up from approximately 6.9
million at the end of the
third quarter of 2013. |
| · | Subscriber
acquisition costs fall.
Subscriber acquisition
costs, per installation,
fell 22% from $45 in the
third quarter of 2013 to
$35 in the third quarter
of 2014. |
| · | Tight
expense management.
Adjusted cash operating
expenses grew just 1.5%
in the third quarter of
2014 to $677.6 million
from $667.6 million in
the third quarter of 2013. |
| · | Adjusted
EBITDA margins reach new
record high. Adjusted
EBITDA as a percentage
of revenue climbed approximately
530 basis points, from
30.7% in the third quarter
of 2013 to 36.0% in the
third quarter of 2014,
which is the highest in
the company’s history. |
| · | Free
cash flow per share climbs.
Following a 9% increase
in free cash flow and a
5% reduction in weighted
average diluted common
shares outstanding, free
cash flow per diluted share
climbed 15% to 4.5 cents
in the third quarter 2014
from 3.9 cents in the third
quarter of 2013. |
“Share repurchases in 2014 total almost $2.1 billion, 2.5
times the $825 million of free cash flow we generated in the first nine months of the year. With the company’s leverage at
3.4 times before the anticipated conversion of our 7% Exchangeable Notes in early December and over $1 billion of undrawn capacity
under our revolving credit facility, we retain substantial balance sheet flexibility to continue our capital returns and to capitalize
on strategic opportunities that may arise,” said David Frear, Chief Financial Officer, SiriusXM.
2014 GUIDANCE
SiriusXM also raised its 2014 revenue, free cash flow and total
net subscriber additions guidance and reaffirmed its other financial and subscriber guidance:
• | Net self-pay subscriber additions of approximately 1.25 million, |
• | Total net subscriber additions of approximately 1.5 million, |
• | Revenue of approximately $4.150 billion, |
• | Adjusted EBITDA of approximately $1.425 billion, and |
• | Free cash flow of approximately $1.120 billion. |
THIRD QUARTER 2014 RESULTS
SIRIUS XM HOLDINGS INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
| |
For the Three Months Ended
September 30, |
| |
For the Nine Months Ended
September 30, |
|
(in thousands, except per share data) | |
|
2014 |
| |
|
2013 |
| |
|
2014 |
| |
|
2013 |
|
Revenue: | |
| | | |
| | | |
| | | |
| | |
Subscriber revenue | |
$ | 902,514 | | |
$ | 834,053 | | |
$ | 2,632,110 | | |
$ | 2,432,113 | |
Advertising revenue | |
| 25,300 | | |
| 21,918 | | |
| 73,012 | | |
| 63,886 | |
Equipment revenue | |
| 23,129 | | |
| 17,989 | | |
| 74,723 | | |
| 54,588 | |
Other revenue | |
| 106,144 | | |
| 87,549 | | |
| 310,298 | | |
| 248,430 | |
Total revenue | |
| 1,057,087 | | |
| 961,509 | | |
| 3,090,143 | | |
| 2,799,017 | |
Operating expenses: | |
| | | |
| | | |
| | | |
| | |
Cost of services: | |
| | | |
| | | |
| | | |
| | |
Revenue share and royalties | |
| 204,307 | | |
| 162,627 | | |
| 599,939 | | |
| 467,017 | |
Programming and content | |
| 74,920 | | |
| 72,322 | | |
| 219,360 | | |
| 217,313 | |
Customer service and billing | |
| 93,013 | | |
| 76,322 | | |
| 274,174 | | |
| 237,006 | |
Satellite and transmission | |
| 21,794 | | |
| 19,853 | | |
| 64,446 | | |
| 59,041 | |
Cost of equipment | |
| 9,485 | | |
| 5,340 | | |
| 29,319 | | |
| 17,809 | |
Subscriber acquisition costs | |
| 119,778 | | |
| 125,457 | | |
| 367,207 | | |
| 371,560 | |
Sales and marketing | |
| 83,906 | | |
| 75,638 | | |
| 237,992 | | |
| 209,594 | |
Engineering, design and development | |
| 16,136 | | |
| 13,007 | | |
| 47,677 | | |
| 42,901 | |
General and administrative | |
| 75,170 | | |
| 67,881 | | |
| 223,995 | | |
| 184,613 | |
Depreciation and amortization | |
| 64,550 | | |
| 58,533 | | |
| 200,021 | | |
| 192,966 | |
Total operating expenses | |
| 763,059 | | |
| 676,980 | | |
| 2,264,130 | | |
| 1,999,820 | |
Income from operations | |
| 294,028 | | |
| 284,529 | | |
| 826,013 | | |
| 799,197 | |
Other income (expense): | |
| | | |
| | | |
| | | |
| | |
Interest expense, net of amounts capitalized | |
| (75,416 | ) | |
| (54,629 | ) | |
| (197,029 | ) | |
| (150,531 | ) |
Loss on extinguishment of debt and credit facilities, net | |
| — | | |
| (107,971 | ) | |
| — | | |
| (124,348 | ) |
Interest and investment income | |
| 6,305 | | |
| 1,716 | | |
| 9,588 | | |
| 3,648 | |
Loss on change in value of derivatives | |
| — | | |
| — | | |
| (34,485 | ) | |
| — | |
Other income (loss) | |
| 297 | | |
| 407 | | |
| (1,354 | ) | |
| 909 | |
Total other expense | |
| (68,814 | ) | |
| (160,477 | ) | |
| (223,280 | ) | |
| (270,322 | ) |
Income before income taxes | |
| 225,214 | | |
| 124,052 | | |
| 602,733 | | |
| 528,875 | |
Income tax expense | |
| (89,044 | ) | |
| (61,158 | ) | |
| (252,614 | ) | |
| (216,857 | ) |
Net income | |
$ | 136,170 | | |
$ | 62,894 | | |
$ | 350,119 | | |
$ | 312,018 | |
Foreign currency translation adjustment, net of tax | |
| (58 | ) | |
| (11 | ) | |
| 20 | | |
| (292 | ) |
Total comprehensive income | |
$ | 136,112 | | |
$ | 62,883 | | |
$ | 350,139 | | |
$ | 311,726 | |
Net income per common share: | |
| | | |
| | | |
| | | |
| | |
Basic | |
$ | 0.02 | | |
$ | 0.01 | | |
$ | 0.06 | | |
$ | 0.05 | |
Diluted | |
$ | 0.02 | | |
$ | 0.01 | | |
$ | 0.06 | | |
$ | 0.05 | |
Weighted average common shares outstanding: | |
| | | |
| | | |
| | | |
| | |
Basic | |
| 5,626,078 | | |
| 6,184,216 | | |
| 5,860,248 | | |
| 6,265,981 | |
Diluted | |
| 5,974,047 | | |
| 6,287,353 | | |
| 6,208,569 | | |
| 6,446,082 | |
SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
| |
As of September 30, |
| |
As of December 31, |
|
| |
|
2014 |
| |
|
2013 |
|
(in thousands, except share and per share data) | |
(Unaudited) | |
|
ASSETS | |
| | | |
| | |
Current assets: | |
| | | |
| | |
Cash and cash equivalents | |
$ | 103,585 | | |
$ | 134,805 | |
Accounts receivable, net | |
| 102,646 | | |
| 103,937 | |
Receivables from distributors | |
| 104,147 | | |
| 88,975 | |
Inventory, net | |
| 24,350 | | |
| 13,863 | |
Prepaid expenses | |
| 126,131 | | |
| 110,530 | |
Related party current assets | |
| 4,006 | | |
| 9,145 | |
Deferred tax asset | |
| 784,143 | | |
| 937,598 | |
Other current assets | |
| 10,444 | | |
| 20,160 | |
Total current assets | |
| 1,259,452 | | |
| 1,419,013 | |
Property and equipment, net | |
| 1,522,635 | | |
| 1,594,574 | |
Long-term restricted investments | |
| 5,922 | | |
| 5,718 | |
Deferred financing fees, net | |
| 12,679 | | |
| 12,604 | |
Intangible assets, net | |
| 2,658,476 | | |
| 2,700,062 | |
Goodwill | |
| 2,205,107 | | |
| 2,204,553 | |
Related party long-term assets | |
| 1,679 | | |
| 30,164 | |
Long-term deferred tax asset | |
| 775,147 | | |
| 868,057 | |
Other long-term assets | |
| 8,260 | | |
| 10,035 | |
Total assets | |
$ | 8,449,357 | | |
$ | 8,844,780 | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | |
| | | |
| | |
Current liabilities: | |
| | | |
| | |
Accounts payable and accrued expenses | |
$ | 552,412 | | |
$ | 578,333 | |
Accrued interest | |
| 75,984 | | |
| 42,085 | |
Current portion of deferred revenue | |
| 1,612,388 | | |
| 1,586,611 | |
Current portion of deferred credit on executory contracts | |
| 2,339 | | |
| 3,781 | |
Current maturities of long-term debt | |
| 498,433 | | |
| 496,815 | |
Current maturities of long-term related party debt | |
| 10,992 | | |
| 10,959 | |
Related party current liabilities | |
| 3,268 | | |
| 20,320 | |
Total current liabilities | |
| 2,755,816 | | |
| 2,738,904 | |
Deferred revenue | |
| 148,474 | | |
| 149,026 | |
Deferred credit on executory contracts | |
| — | | |
| 1,394 | |
Long-term debt | |
| 4,259,646 | | |
| 3,093,821 | |
Related party long-term liabilities | |
| 14,345 | | |
| 16,337 | |
Other long-term liabilities | |
| 97,661 | | |
| 99,556 | |
Total liabilities | |
| 7,275,942 | | |
| 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 September 30, 2014 and December 31, 2013 | |
| — | | |
| — | |
Common stock, par value $0.001; 9,000,000,000 shares authorized; 5,542,621,493 and 6,096,220,526 shares issued; 5,538,190,736 and 6,096,220,526 outstanding at September 30, 2014 and December 31, 2013, respectively | |
| 5,543 | | |
| 6,096 | |
Accumulated other comprehensive loss, net of tax | |
| (288 | ) | |
| (308 | ) |
Additional paid-in capital | |
| 6,767,781 | | |
| 8,674,129 | |
Treasury stock, at cost; 4,430,757 and 0 shares of common stock at September 30, 2014 and December 31, 2013, respectively | |
| (15,565 | ) | |
| — | |
Accumulated deficit | |
| (5,584,056 | ) | |
| (5,934,175 | ) |
Total stockholders’ equity | |
| 1,173,415 | | |
| 2,745,742 | |
Total liabilities and stockholders’ equity | |
$ | 8,449,357 | | |
$ | 8,844,780 | |
SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| |
For the Nine Months Ended September 30, | |
(in thousands) | |
2014 | | |
2013 | |
Cash flows from operating activities: | |
| | | |
| | |
Net income | |
$ | 350,119 | | |
$ | 312,018 | |
Adjustments to reconcile net income to net cash provided by operating activities: | |
| | | |
| | |
Depreciation and amortization | |
| 200,021 | | |
| 192,966 | |
Non-cash interest expense, net of amortization of premium | |
| 16,515 | | |
| 16,506 | |
Provision for doubtful accounts | |
| 32,875 | | |
| 28,571 | |
Amortization of deferred income related to equity method investment | |
| (2,081 | ) | |
| (2,082 | ) |
Loss on extinguishment of debt and credit facilities, net | |
| — | | |
| 124,348 | |
Gain on unconsolidated entity investments, net | |
| (2,677 | ) | |
| (2,831 | ) |
Dividend received from unconsolidated entity investment | |
| 12,873 | | |
| 17,707 | |
Loss on disposal of assets | |
| 217 | | |
| 128 | |
Loss on change in value of derivatives | |
| 34,485 | | |
| — | |
Share-based payment expense | |
| 57,832 | | |
| 49,774 | |
Deferred income taxes | |
| 244,667 | | |
| 219,184 | |
Other non-cash purchase price adjustments | |
| (2,836 | ) | |
| (206,786 | ) |
Changes in operating assets and liabilities: | |
| | | |
| | |
Accounts receivable | |
| (31,584 | ) | |
| (25,207 | ) |
Receivables from distributors | |
| (15,172 | ) | |
| 23,606 | |
Inventory | |
| (10,487 | ) | |
| 11,095 | |
Related party assets | |
| (995 | ) | |
| 2,077 | |
Prepaid expenses and other current assets | |
| (16,319 | ) | |
| (6,665 | ) |
Other long-term assets | |
| 1,567 | | |
| (363 | ) |
Accounts payable and accrued expenses | |
| (36,861 | ) | |
| (58,680 | ) |
Accrued interest | |
| 33,899 | | |
| 19,964 | |
Deferred revenue | |
| 25,225 | | |
| 34,530 | |
Related party liabilities | |
| (1,261 | ) | |
| (635 | ) |
Other long-term liabilities | |
| (1,854 | ) | |
| (4,968 | ) |
Net cash provided by operating activities | |
| 888,168 | | |
| 744,257 | |
| |
| | | |
| | |
Cash flows from investing activities: | |
| | | |
| | |
Additions to property and equipment | |
| (87,244 | ) | |
| (118,235 | ) |
Purchases of restricted and other investments | |
| — | | |
| (1,719 | ) |
Acquisition of business, net of cash acquired | |
| 1,144 | | |
| — | |
Return of capital from investment in unconsolidated entity | |
| 24,178 | | |
| — | |
Net cash used in investing activities | |
| (61,922 | ) | |
| (119,954 | ) |
| |
| | | |
| | |
Cash flows from financing activities: | |
| | | |
| | |
Proceeds from exercise of stock options | |
| 331 | | |
| 21,819 | |
Taxes paid in lieu of shares issued for stock-based compensation | |
| (24,781 | ) | |
| (27,913 | ) |
Proceeds from long-term borrowings and revolving credit facility, net of costs | |
| 2,151,205 | | |
| 2,532,137 | |
Payment of premiums on redemption of debt | |
| — | | |
| (116,410 | ) |
Repayment of long-term borrowings and revolving credit facility | |
| (993,772 | ) | |
| (1,085,737 | ) |
Repayment of related party long-term borrowings | |
| — | | |
| (150,000 | ) |
Common stock repurchased and retired | |
| (1,990,449 | ) | |
| (1,602,360 | ) |
Net cash used in financing activities | |
| (857,466 | ) | |
| (428,464 | ) |
Net (decrease) increase in cash and cash equivalents | |
| (31,220 | ) | |
| 195,839 | |
Cash and cash equivalents at beginning of period | |
| 134,805 | | |
| 520,945 | |
Cash and cash equivalents at end of period | |
$ | 103,585 | | |
$ | 716,784 | |
Key Operating Metrics
The following table contains our key operating metrics for the
three and nine months ended September 30, 2014 and 2013, respectively. Subscribers to our connected vehicle services are not included
in our subscriber count:
| |
Unaudited | |
| |
For the Three Months Ended September 30, | | |
For the Nine Months Ended September 30, | |
(in thousands, except subscriber, per subscriber and per installation amounts) | |
2014 | | |
2013 | | |
2014 | | |
2013 | |
Self-pay subscribers | |
| 22,014,606 | | |
| 20,670,333 | | |
| 22,014,606 | | |
| 20,670,333 | |
Paid promotional subscribers | |
| 4,719,792 | | |
| 4,911,733 | | |
| 4,719,792 | | |
| 4,911,733 | |
Ending subscribers | |
| 26,734,398 | | |
| 25,582,066 | | |
| 26,734,398 | | |
| 25,582,066 | |
| |
| | | |
| | | |
| | | |
| | |
Self-pay subscribers | |
| 379,598 | | |
| 372,597 | | |
| 932,789 | | |
| 1,100,059 | |
Paid promotional subscribers | |
| 53,219 | | |
| 140,481 | | |
| 242,299 | | |
| 581,671 | |
Net additions | |
| 432,817 | | |
| 513,078 | | |
| 1,175,088 | | |
| 1,681,730 | |
| |
| | | |
| | | |
| | | |
| | |
Daily weighted average number of subscribers | |
| 26,487,969 | | |
| 25,267,241 | | |
| 26,035,178 | | |
| 24,646,938 | |
| |
| | | |
| | | |
| | | |
| | |
Average self-pay monthly churn | |
| 1.9 | % | |
| 1.8 | % | |
| 1.9 | % | |
| 1.8 | % |
| |
| | | |
| | | |
| | | |
| | |
New vehicle consumer conversion rate | |
| 41 | % | |
| 44 | % | |
| 42 | % | |
| 44 | % |
| |
| | | |
| | | |
| | | |
| | |
ARPU | |
$ | 12.47 | | |
$ | 12.29 | | |
$ | 12.34 | | |
$ | 12.21 | |
SAC, per installation | |
$ | 35 | | |
$ | 45 | | |
$ | 34 | | |
$ | 46 | |
Customer service and billing expenses, per average subscriber | |
$ | 1.07 | | |
$ | 1.00 | | |
$ | 1.07 | | |
$ | 1.06 | |
Free cash flow | |
$ | 267,269 | | |
$ | 245,262 | | |
$ | 825,102 | | |
$ | 624,303 | |
Adjusted EBITDA | |
$ | 381,251 | | |
$ | 295,742 | | |
$ | 1,086,469 | | |
$ | 840,589 | |
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 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 unaudited 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 September 30, | | |
For the Nine Months Ended September 30, | |
| |
2014 | | |
2013 | | |
2014 | | |
2013 | |
| |
| | |
| | |
| | |
| |
Net income (GAAP): | |
$ | 136,170 | | |
$ | 62,894 | | |
$ | 350,119 | | |
$ | 312,018 | |
Add back items excluded from Adjusted EBITDA: | |
| | | |
| | | |
| | | |
| | |
Purchase price accounting adjustments: | |
| | | |
| | | |
| | | |
| | |
Revenues | |
| 1,813 | | |
| 1,813 | | |
| 5,438 | | |
| 5,438 | |
Operating expenses | |
| (945 | ) | |
| (68,895 | ) | |
| (2,835 | ) | |
| (206,786 | ) |
Share-based payment expense (GAAP) | |
| 21,805 | | |
| 19,762 | | |
| 57,832 | | |
| 49,774 | |
Depreciation and amortization (GAAP) | |
| 64,550 | | |
| 58,533 | | |
| 200,021 | | |
| 192,966 | |
Interest expense, net of amounts capitalized (GAAP) | |
| 75,416 | | |
| 54,629 | | |
| 197,029 | | |
| 150,531 | |
Loss on extinguishment of debt and credit facilities, net (GAAP) | |
| — | | |
| 107,971 | | |
| — | | |
| 124,348 | |
Interest and investment income (GAAP) | |
| (6,305 | ) | |
| (1,716 | ) | |
| (9,588 | ) | |
| (3,648 | ) |
Loss on change in value of derivatives (GAAP) | |
| — | | |
| — | | |
| 34,485 | | |
| — | |
Other (income) loss (GAAP) | |
| (297 | ) | |
| (407 | ) | |
| 1,354 | | |
| (909 | ) |
Income tax expense (GAAP) | |
| 89,044 | | |
| 61,158 | | |
| 252,614 | | |
| 216,857 | |
Adjusted EBITDA | |
$ | 381,251 | | |
$ | 295,742 | | |
$ | 1,086,469 | | |
$ | 840,589 | |
Adjusted Net Income - We
define this Non-GAAP financial measure as our actual net income adjusted to exclude the impact of certain purchase price accounting
adjustments and the loss on change in value of derivatives, net of income tax expense. The following table reconciles our actual
income before income taxes to our adjusted net income for the three and nine months ended September 30, 2014 and 2013 (in thousands):
| |
Unaudited | |
| |
For the Three Months Ended September 30, | | |
For the Nine Months Ended September 30, | |
| |
2014 | | |
2013 | | |
2014 | | |
2013 | |
| |
| | |
| | |
| | |
| |
Income before income taxes (GAAP): | |
$ | 225,214 | | |
$ | 124,052 | | |
$ | 602,733 | | |
$ | 528,875 | |
Add back items excluded from adjusted net income: | |
| | | |
| | | |
| | | |
| | |
Purchase price accounting adjustments: | |
| | | |
| | | |
| | | |
| | |
Revenues | |
| 1,813 | | |
| 1,813 | | |
| 5,438 | | |
| 5,438 | |
Operating expenses | |
| (945 | ) | |
| (68,895 | ) | |
| (2,835 | ) | |
| (206,786 | ) |
Loss on change in value of derivatives (GAAP) | |
| — | | |
| — | | |
| 34,485 | | |
| — | |
Adjusted income before income taxes | |
$ | 226,082 | | |
$ | 56,970 | | |
$ | 639,821 | | |
$ | 327,527 | |
Allocable income tax expense | |
| (87,946 | ) | |
| (22,218 | ) | |
| (248,890 | ) | |
| (127,736 | ) |
Adjusted net income | |
$ | 138,136 | | |
$ | 34,752 | | |
$ | 390,931 | | |
$ | 199,791 | |
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 nine months ended September 30, 2014 and 2013:
| |
Unaudited For the Three Months Ended September 30, 2014 | |
(in thousands) | |
As Reported | |
Purchase Price Accounting Adjustments | |
Allocation of Share-based Payment Expense | |
Adjusted | |
| |
| |
| |
| |
| |
Revenue: | |
| | |
| | |
| | |
| | |
Subscriber revenue | |
$ | 902,514 | |
$ | — | |
$ | — | |
$ | 902,514 | |
Advertising revenue | |
| 25,300 | |
| — | |
| — | |
| 25,300 | |
Equipment revenue | |
| 23,129 | |
| — | |
| — | |
| 23,129 | |
Other revenue | |
| 106,144 | |
| 1,813 | |
| — | |
| 107,957 | |
Total revenue | |
$ | 1,057,087 | |
$ | 1,813 | |
$ | — | |
$ | 1,058,900 | |
Operating expenses | |
| | |
| | |
| | |
| | |
Cost of services: | |
| | |
| | |
| | |
| | |
Revenue share and royalties | |
$ | 204,307 | |
$ | — | |
$ | — | |
$ | 204,307 | |
Programming and content | |
| 74,920 | |
| 945 | |
| (2,434 | ) |
| 73,431 | |
Customer service and billing | |
| 93,013 | |
| — | |
| (868 | ) |
| 92,145 | |
Satellite and transmission | |
| 21,794 | |
| — | |
| (1,185 | ) |
| 20,609 | |
Cost of equipment | |
| 9,485 | |
| — | |
| — | |
| 9,485 | |
Subscriber acquisition costs | |
| 119,778 | |
| — | |
| — | |
| 119,778 | |
Sales and marketing | |
| 83,906 | |
| — | |
| (4,265 | ) |
| 79,641 | |
Engineering, design and development | |
| 16,136 | |
| — | |
| (2,559 | ) |
| 13,577 | |
General and administrative | |
| 75,170 | |
| — | |
| (10,494 | ) |
| 64,676 | |
Depreciation and amortization (a) | |
| 64,550 | |
| — | |
| — | |
| 64,550 | |
Share-based payment expense | |
| — | |
| — | |
| 21,805 | |
| 21,805 | |
Total operating expenses | |
$ | 763,059 | |
$ | 945 | |
$ | — | |
$ | 764,004 | |
(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 September 30, 2014 was $9,000.
| |
Unaudited For the Three Months Ended September 30, 2013 | |
(in thousands) | |
As Reported | |
Purchase Price Accounting Adjustments | |
Allocation of Share-based Payment Expense | |
Adjusted | |
| |
| |
| |
| |
| |
Revenue: | |
| | |
| | |
| | |
| | |
Subscriber revenue | |
$ | 834,053 | |
$ | — | |
$ | — | |
$ | 834,053 | |
Advertising revenue | |
| 21,918 | |
| — | |
| — | |
| 21,918 | |
Equipment revenue | |
| 17,989 | |
| — | |
| — | |
| 17,989 | |
Other revenue | |
| 87,549 | |
| 1,813 | |
| — | |
| 89,362 | |
Total revenue | |
$ | 961,509 | |
$ | 1,813 | |
$ | — | |
$ | 963,322 | |
Operating expenses | |
| | |
| | |
| | |
| | |
Cost of services: | |
| | |
| | |
| | |
| | |
Revenue share and royalties | |
$ | 162,627 | |
$ | 41,942 | |
$ | — | |
$ | 204,569 | |
Programming and content | |
| 72,322 | |
| 2,008 | |
| (2,232 | ) |
| 72,098 | |
Customer service and billing | |
| 76,322 | |
| — | |
| (647 | ) |
| 75,675 | |
Satellite and transmission | |
| 19,853 | |
| — | |
| (1,076 | ) |
| 18,777 | |
Cost of equipment | |
| 5,340 | |
| — | |
| — | |
| 5,340 | |
Subscriber acquisition costs | |
| 125,457 | |
| 20,342 | |
| — | |
| 145,799 | |
Sales and marketing | |
| 75,638 | |
| 4,603 | |
| (3,871 | ) |
| 76,370 | |
Engineering, design and development | |
| 13,007 | |
| — | |
| (2,177 | ) |
| 10,830 | |
General and administrative | |
| 67,881 | |
| — | |
| (9,759 | ) |
| 58,122 | |
Depreciation and amortization (a) | |
| 58,533 | |
| — | |
| — | |
| 58,533 | |
Share-based payment expense | |
| — | |
| — | |
| 19,762 | |
| 19,762 | |
Total operating expenses | |
$ | 676,980 | |
$ | 68,895 | |
$ | — | |
$ | 745,875 | |
(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 September 30, 2013 was $12,000.
| |
Unaudited For the Nine Months Ended September 30, 2014 | |
(in thousands) | |
As Reported | | |
Purchase Price
Accounting Adjustments | | |
Allocation of
Share-based
Payment Expense | | |
Adjusted | |
| |
| | | |
| | | |
| | | |
| | |
Revenue: | |
| | | |
| | | |
| | | |
| | |
Subscriber revenue | |
$ | 2,632,110 | | |
$ | — | | |
$ | — | | |
$ | 2,632,110 | |
Advertising revenue | |
| 73,012 | | |
| — | | |
| — | | |
| 73,012 | |
Equipment revenue | |
| 74,723 | | |
| — | | |
| — | | |
| 74,723 | |
Other revenue | |
| 310,298 | | |
| 5,438 | | |
| — | | |
| 315,736 | |
Total revenue | |
$ | 3,090,143 | | |
$ | 5,438 | | |
$ | — | | |
$ | 3,095,581 | |
Operating expenses | |
| | | |
| | | |
| | | |
| | |
Cost of services: | |
| | | |
| | | |
| | | |
| | |
Revenue share and royalties | |
$ | 599,939 | | |
$ | — | | |
$ | — | | |
$ | 599,939 | |
Programming and content | |
| 219,360 | | |
| 2,835 | | |
| (6,903 | ) | |
| 215,292 | |
Customer service and billing | |
| 274,174 | | |
| — | | |
| (2,032 | ) | |
| 272,142 | |
Satellite and transmission | |
| 64,446 | | |
| — | | |
| (3,087 | ) | |
| 61,359 | |
Cost of equipment | |
| 29,319 | | |
| — | | |
| — | | |
| 29,319 | |
Subscriber acquisition costs | |
| 367,207 | | |
| — | | |
| — | | |
| 367,207 | |
Sales and marketing | |
| 237,992 | | |
| — | | |
| (11,238 | ) | |
| 226,754 | |
Engineering, design and development | |
| 47,677 | | |
| — | | |
| (6,422 | ) | |
| 41,255 | |
General and administrative | |
| 223,995 | | |
| — | | |
| (28,150 | ) | |
| 195,845 | |
Depreciation and amortization (a) | |
| 200,021 | | |
| — | | |
| — | | |
| 200,021 | |
Share-based payment expense | |
| — | | |
| — | | |
| 57,832 | | |
| 57,832 | |
Total operating expenses | |
$ | 2,264,130 | | |
$ | 2,835 | | |
$ | — | | |
$ | 2,266,965 | |
(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 nine months ended September
30, 2014 was $29,000.
| |
Unaudited For the Nine Months Ended September 30, 2013 | |
(in thousands) | |
As Reported | | |
Purchase Price
Accounting Adjustments | | |
Allocation of
Share-based
Payment Expense | | |
Adjusted | |
| |
| | | |
| | | |
| | | |
| | |
Revenue: | |
| | | |
| | | |
| | | |
| | |
Subscriber revenue | |
$ | 2,432,113 | | |
$ | — | | |
$ | — | | |
$ | 2,432,113 | |
Advertising revenue | |
| 63,886 | | |
| — | | |
| — | | |
| 63,886 | |
Equipment revenue | |
| 54,588 | | |
| — | | |
| — | | |
| 54,588 | |
Other revenue | |
| 248,430 | | |
| 5,438 | | |
| — | | |
| 253,868 | |
Total revenue | |
$ | 2,799,017 | | |
$ | 5,438 | | |
$ | — | | |
$ | 2,804,455 | |
Operating expenses | |
| | | |
| | | |
| | | |
| | |
Cost of services: | |
| | | |
| | | |
| | | |
| | |
Revenue share and royalties | |
$ | 467,017 | | |
$ | 122,534 | | |
$ | — | | |
$ | 589,551 | |
Programming and content | |
| 217,313 | | |
| 6,965 | | |
| (5,513 | ) | |
| 218,765 | |
Customer service and billing | |
| 237,006 | | |
| — | | |
| (1,628 | ) | |
| 235,378 | |
Satellite and transmission | |
| 59,041 | | |
| — | | |
| (2,753 | ) | |
| 56,288 | |
Cost of equipment | |
| 17,809 | | |
| — | | |
| — | | |
| 17,809 | |
Subscriber acquisition costs | |
| 371,560 | | |
| 64,365 | | |
| — | | |
| 435,925 | |
Sales and marketing | |
| 209,594 | | |
| 12,922 | | |
| (10,114 | ) | |
| 212,402 | |
Engineering, design and development | |
| 42,901 | | |
| — | | |
| (5,458 | ) | |
| 37,443 | |
General and administrative | |
| 184,613 | | |
| — | | |
| (24,308 | ) | |
| 160,305 | |
Depreciation and amortization (a) | |
| 192,966 | | |
| — | | |
| — | | |
| 192,966 | |
Share-based payment expense | |
| — | | |
| — | | |
| 49,774 | | |
| 49,774 | |
Total operating expenses | |
$ | 1,999,820 | | |
$ | 206,786 | | |
$ | — | | |
$ | 2,206,606 | |
(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 nine months ended September
30, 2013 was $37,000.
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 nine months ended September
30, 2014 and 2013:
| |
Unaudited | |
| |
For the Three Months Ended
September 30, | | |
For the Nine Months Ended
September 30, | |
| |
2014 | | |
2013 | | |
2014 | | |
2013 | |
| |
| | |
| | |
| | |
| |
Operating expenses (GAAP): | |
$ | 763,059 | | |
$ | 676,980 | | |
$ | 2,264,130 | | |
$ | 1,999,820 | |
Items excluded from adjusted cash operating expenses: | |
| | | |
| | | |
| | | |
| | |
Purchase price accounting adjustments | |
| 945 | | |
| 68,895 | | |
| 2,835 | | |
| 206,786 | |
Share-based payment expense (GAAP) | |
| (21,805 | ) | |
| (19,762 | ) | |
| (57,832 | ) | |
| (49,774 | ) |
Depreciation and amortization (GAAP) | |
| (64,550 | ) | |
| (58,533 | ) | |
| (200,021 | ) | |
| (192,966 | ) |
Adjusted cash operating expenses | |
$ | 677,649 | | |
$ | 667,580 | | |
$ | 2,009,112 | | |
$ | 1,963,866 | |
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
September 30, | | |
For the Nine Months Ended
September 30, | |
| |
2014 | | |
2013 | | |
2014 | | |
2013 | |
Subscriber revenue, excluding connected vehicle (GAAP) | |
$ | 880,093 | | |
$ | 834,053 | | |
$ | 2,568,742 | | |
$ | 2,432,113 | |
Add: advertising revenue (GAAP) | |
| 25,300 | | |
| 21,918 | | |
| 73,012 | | |
| 63,886 | |
Add: other subscription-related revenue (GAAP) | |
| 85,380 | | |
| 75,999 | | |
| 249,138 | | |
| 211,784 | |
| |
$ | 990,773 | | |
$ | 931,970 | | |
$ | 2,890,892 | | |
$ | 2,707,783 | |
| |
| | | |
| | | |
| | | |
| | |
Daily weighted average number of subscribers | |
| 26,487,969 | | |
| 25,267,241 | | |
| 26,035,178 | | |
| 24,646,938 | |
| |
| | | |
| | | |
| | | |
| | |
ARPU | |
$ | 12.47 | | |
$ | 12.29 | | |
$ | 12.34 | | |
$ | 12.21 | |
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 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
September 30, | | |
For
the Nine Months Ended
September 30, | |
| |
2014 | | |
2013 | | |
2014 | | |
2013 | |
Customer
service and billing expenses, excluding connected vehicle (GAAP) | |
$ | 85,868 | | |
$ | 76,322 | | |
$ | 252,677 | | |
$ | 237,006 | |
Less:
share-based payment expense (GAAP) | |
| (868 | ) | |
| (647 | ) | |
| (2,032 | ) | |
| (1,628 | ) |
| |
$ | 85,000 | | |
$ | 75,675 | | |
$ | 250,645 | | |
$ | 235,378 | |
| |
| | | |
| | | |
| | | |
| | |
Daily weighted
average number of subscribers | |
| 26,487,969 | | |
| 25,267,241 | | |
| 26,035,178 | | |
| 24,646,938 | |
| |
| | | |
| | | |
| | | |
| | |
Customer
service and billing expenses, per average subscriber | |
$ | 1.07 | | |
$ | 1.00 | | |
$ | 1.07 | | |
$ | 1.06 | |
Free cash flow - is 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 per share data):
| |
Unaudited | |
| |
For the Three Months Ended
September 30, | | |
For the Nine Months Ended
September 30, | |
| |
2014 | | |
2013 | | |
2014 | | |
2013 | |
Cash Flow information | |
| | | |
| | | |
| | | |
| | |
Net cash provided by operating activities | |
$ | 296,096 | | |
$ | 302,236 | | |
$ | 888,168 | | |
$ | 744,257 | |
Net cash used in investing activities | |
$ | (28,827 | ) | |
$ | (56,974 | ) | |
$ | (61,922 | ) | |
$ | (119,954 | ) |
Net cash used in financing activities | |
$ | (333,664 | ) | |
$ | (180,247 | ) | |
$ | (857,466 | ) | |
$ | (428,464 | ) |
Free Cash Flow | |
| | | |
| | | |
| | | |
| | |
Net cash provided by operating activities | |
$ | 296,096 | | |
$ | 302,236 | | |
$ | 888,168 | | |
$ | 744,257 | |
Additions to property and equipment | |
| (28,827 | ) | |
| (55,255 | ) | |
| (87,244 | ) | |
| (118,235 | ) |
Purchases of restricted and other investments | |
| — | | |
| (1,719 | ) | |
| — | | |
| (1,719 | ) |
Return of capital from investment in unconsolidated entity | |
| — | | |
| — | | |
| 24,178 | | |
| — | |
Free cash flow | |
$ | 267,269 | | |
$ | 245,262 | | |
$ | 825,102 | | |
$ | 624,303 | |
| |
| | | |
| | | |
| | | |
| | |
Diluted weighted average common shares outstanding | |
| 5,974,047 | | |
| 6,287,353 | | |
| 6,208,569 | | |
| 6,446,082 | |
| |
| | | |
| | | |
| | | |
| | |
Free cash flow per diluted share | |
$ | 0.04 | | |
$ | 0.04 | | |
$ | 0.13 | | |
$ | 0.10 | |
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 September 30, | | |
For the Nine Months Ended September 30, | |
| |
2014 | | |
2013 | | |
2014 | | |
2013 | |
Subscriber acquisition costs (GAAP) | |
$ | 119,778 | | |
$ | 125,457 | | |
$ | 367,207 | | |
$ | 371,560 | |
Less: margin from direct sales of radios and accessories (GAAP) | |
| (13,644 | ) | |
| (12,649 | ) | |
| (45,404 | ) | |
| (36,779 | ) |
Add: purchase price accounting adjustments | |
| — | | |
| 20,342 | | |
| — | | |
| 64,365 | |
| |
$ | 106,134 | | |
$ | 133,150 | | |
$ | 321,803 | | |
$ | 399,146 | |
| |
| | | |
| | | |
| | | |
| | |
Installations | |
| 3,038,041 | | |
| 2,973,681 | | |
| 9,396,115 | | |
| 8,657,841 | |
| |
| | | |
| | | |
| | | |
| | |
SAC, per installation | |
$ | 35 | | |
$ | 45 | | |
$ | 34 | | |
$ | 46 | |
###
About SiriusXM
Sirius XM Holdings Inc. (NASDAQ: SIRI) is the world’s
largest radio broadcaster measured by revenue and has 26.7 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™,
SiriusXM Travel Link, NavTraffic®, NavWeather™, SiriusXM Aviation, SiriusXM Marine™, Sirius Marine Weather, XMWX
Aviation™, and XMWX Marine™. 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
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