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):
February 5, 2015 (February 5, 2015)
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:
o |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|
|
o |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
|
|
o |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
|
|
o |
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 February 5, 2015, we reported our financial
and operating results for the three months and year ended December 31, 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.
|
SIRIUS XM HOLDINGS INC. |
|
|
|
|
|
|
By: |
/s/ Patrick L. Donnelly |
|
|
|
Patrick L. Donnelly |
|
|
|
Executive Vice President, General Counsel and Secretary |
Dated: February 5, 2015
EXHIBITS
Exhibit |
|
Description of Exhibit
|
|
|
|
99.1 |
|
Press Release dated February 5, 2015 |
Exhibit 99.1
SiriusXM Reports Fourth Quarter and Full-Year
2014 Results
| · | 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 |
NEW YORK – February 5, 2015 – 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.
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 31, | | |
For the Twelve Months Ended December 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, | |
(in thousands, except share and per share data) | |
2014 | | |
2013 | |
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 | |
| |
For the Three Months Ended December 31, | | |
For the Twelve Months Ended December 31, | |
(in thousands, except subscriber, per subscriber and per installation amounts) | |
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 31, | | |
For the Twelve Months Ended December 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 31, | | |
For the Twelve Months Ended December 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 December 31, | | |
For the Twelve Months Ended 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 December 31, | | |
For the Twelve Months Ended 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 31, | | |
For the Twelve Months Ended December 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 31, | | |
For the Twelve Months Ended December 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™,
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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