NEW YORK, Oct. 28, 2014
/PRNewswire/ --
- 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
- Share Repurchases Total Nearly $2.1
Billion Year-to-Date
- 2014 Subscriber, Revenue and Free Cash Flow Guidance
Raised
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
|
(in thousands,
except subscriber, per subscriber
and per installation amounts)
|
For the Three
Months Ended
September 30,
|
|
For the Nine
Months
Ended September 30,
|
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
Logo -
http://photos.prnewswire.com/prnh/20101014/NY82093LOGO
SOURCE Sirius XM Holdings Inc.