NEW YORK, Feb. 2, 2016 /PRNewswire/ -- SiriusXM today
announced fourth quarter and full-year 2015 operating and financial
results, including record revenue of $1.2
billion and $4.6 billion,
respectively, up 10% and 9% versus the prior year periods.
Net income totaled $135 million
and $510 million in the fourth
quarter and full-year 2015, respectively, compared to $143 million and $493
million in the fourth quarter and full-year 2014. Net
income per diluted common share was $0.03 and $0.09 in
the fourth quarter and full-year 2015, respectively, versus
$0.03 and $0.08 in the fourth quarter and full-year 2014.
Adjusted EBITDA was $396 million and
$1.66 billion in the fourth quarter
and full-year, respectively, up 4% and 13% compared to the prior
year periods.
"We produced our best subscriber growth in eight years, taking
our subscriber base to approximately 29.6 million. The company also
set records in 2015 for revenue, adjusted EBITDA, and free cash
flow. We are investing in new marketing capabilities, our connected
vehicle business, new satellites, a next generation wideband
chipset and, most importantly, our world-class and exclusive
content. We expect that these investments, together with our
long-standing focus on execution, will help us continue our long
history of strong, profitable growth," said Jim Meyer, Chief Executive Officer,
SiriusXM.
"SiriusXM's strong, resilient business model and ability to
deploy capital to benefit our stockholders present a compelling
investment opportunity. Our content bundle of commercial-free music
channels, live sports events, expanded comedy and entertainment
programming remains a unique value in audio entertainment. And the
development and deployment of our next-generation SXM17
entertainment platform and telematics services in connected
vehicles position us well to continue our enviable place in the
dashboard," added Meyer.
FULL-YEAR 2015 HIGHLIGHTS
- Subscriber Growth Continues. SiriusXM added 2,283,000
net new subscribers in 2015, the highest growth in net subscribers
since 2007, before Sirius and XM merged. The growth in net
new subscribers in 2015 represents a 30% increase from the
1,752,000 net new subscribers added in 2014. Self-pay net
subscriber additions were 1,765,000 in 2015, approximately 23%
higher than in 2014. Total paid subscribers climbed 8% in 2015 to
approximately 29.6 million, and self-pay subscribers also increased
8% in 2015 to 24.3 million, both record highs.
- Full-year Adjusted EBITDA Rose 13% to a Record High.
Adjusted EBITDA of $1.66 billion in
2015 was the highest in the company's history, an increase of 13%
over the $1.47 billion reported in
2014. The company's adjusted EBITDA margin was also a record high
of 36%, an increase from 35% in 2014.
- Free Cash Flow Per Diluted Share Increased 23%. Free
cash flow of $1.32 billion in 2015
was up 14% from $1.16 billion in
2014. With increased cash flow and a 7% lower average diluted
share count from the company's share repurchase program, free cash
flow per diluted share climbed 23% to 24.2
cents in 2015, up from 19.7
cents in 2014.
"During the fourth quarter, we spent $369
million to repurchase 92 million of our shares. In January,
as our stock fell alongside the worldwide market declines, we
accelerated our repurchases to nearly $200
million, repurchasing an additional 52 million shares. Our
stock repurchase plan has now delivered $6.5
billion into the hands of our stockholders in just three
years. We continue to maintain modest leverage of just 3.3 times
adjusted EBITDA, and with no near term maturities and growing free
cash flow, we have ample options on how we deploy our capital going
forward," remarked David Frear,
Chief Financial Officer, SiriusXM.
2016 GUIDANCE
Our full-year 2016 guidance for continued growth in net
subscribers, revenue, adjusted EBITDA, and free cash flow,
originally issued on January 5, 2016,
is as follows:
- Net subscriber additions of approximately 1.4 million,
- Revenue of approximately $4.9
billion,
- Adjusted EBITDA of approximately $1.78
billion, and
- Free cash flow of approximately $1.4
billion.
FOURTH QUARTER AND FULL-YEAR 2015 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)
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
(Unaudited)
|
|
(Unaudited)
|
|
|
|
|
Revenue:
|
|
|
|
|
|
|
|
Subscriber
revenue
|
$
998,775
|
|
$
922,192
|
|
$
3,824,793
|
|
$
3,554,302
|
Advertising
revenue
|
33,449
|
|
27,970
|
|
122,292
|
|
100,982
|
Equipment
revenue
|
30,944
|
|
29,938
|
|
110,923
|
|
104,661
|
Other
revenue
|
132,978
|
|
110,852
|
|
512,050
|
|
421,150
|
Total
revenue
|
1,196,146
|
|
1,090,952
|
|
4,570,058
|
|
4,181,095
|
Operating
expenses:
|
|
|
|
|
|
|
|
Cost of
services:
|
|
|
|
|
|
|
|
Revenue share and
royalties
|
251,717
|
|
210,089
|
|
1,034,832
|
|
810,028
|
Programming and
content
|
76,868
|
|
77,953
|
|
293,091
|
|
297,313
|
Customer service and
billing
|
99,387
|
|
96,411
|
|
377,908
|
|
370,585
|
Satellite and
transmission
|
28,848
|
|
21,567
|
|
94,609
|
|
86,013
|
Cost of
equipment
|
13,703
|
|
15,078
|
|
42,724
|
|
44,397
|
Subscriber
acquisition costs
|
140,826
|
|
126,257
|
|
532,599
|
|
493,464
|
Sales and
marketing
|
98,411
|
|
98,488
|
|
354,189
|
|
336,480
|
Engineering, design
and development
|
17,223
|
|
15,107
|
|
64,403
|
|
62,784
|
General and
administrative
|
105,607
|
|
69,943
|
|
324,801
|
|
293,938
|
Depreciation and
amortization
|
69,687
|
|
66,402
|
|
272,214
|
|
266,423
|
Total operating
expenses
|
902,277
|
|
797,295
|
|
3,391,370
|
|
3,061,425
|
Income from
operations
|
293,869
|
|
293,657
|
|
1,178,688
|
|
1,119,670
|
Other income
(expense):
|
|
|
|
|
|
|
|
Interest expense, net
of amounts capitalized
|
(77,191)
|
|
(71,981)
|
|
(299,103)
|
|
(269,010)
|
Loss on change in
value of derivatives
|
-
|
|
-
|
|
-
|
|
(34,485)
|
Other
income
|
3,302
|
|
6,377
|
|
12,379
|
|
14,611
|
Total other
expense
|
(73,889)
|
|
(65,604)
|
|
(286,724)
|
|
(288,884)
|
Income before income
taxes
|
219,980
|
|
228,053
|
|
891,964
|
|
830,786
|
Income tax
expense
|
(85,347)
|
|
(84,931)
|
|
(382,240)
|
|
(337,545)
|
Net income
|
$
134,633
|
|
$
143,122
|
|
$
509,724
|
|
$
493,241
|
Foreign currency
translation adjustment, net of tax
|
-
|
|
(114)
|
|
(100)
|
|
(94)
|
Total comprehensive
income
|
$
134,633
|
|
$
143,008
|
|
$
509,624
|
|
$
493,147
|
Net income per common
share:
|
|
|
|
|
|
|
|
Basic
|
$
0.03
|
|
$
0.03
|
|
$
0.09
|
|
$
0.09
|
Diluted
|
$
0.03
|
|
$
0.03
|
|
$
0.09
|
|
$
0.08
|
Weighted average
common shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
5,195,673
|
|
5,577,325
|
|
5,375,707
|
|
5,788,944
|
Diluted
|
5,247,514
|
|
5,643,839
|
|
5,435,166
|
|
5,862,020
|
SIRIUS XM HOLDINGS
INC. AND SUBSIDIARIES
|
CONSOLIDATED BALANCE
SHEETS
|
|
As of December
31,
|
|
2015
|
|
2014
|
(in thousands,
except per share data)
|
|
|
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
111,838
|
|
$
147,724
|
Receivables,
net
|
234,782
|
|
220,579
|
Inventory,
net
|
22,295
|
|
19,397
|
Related party current
assets
|
5,941
|
|
4,344
|
Deferred tax
assets
|
-
|
|
1,038,603
|
Prepaid expenses and
other current assets
|
187,033
|
|
119,099
|
Total current
assets
|
561,889
|
|
1,549,746
|
Property and
equipment, net
|
1,415,401
|
|
1,510,112
|
Long-term restricted
investments
|
9,888
|
|
5,922
|
Intangible assets,
net
|
2,593,346
|
|
2,645,046
|
Goodwill
|
2,205,107
|
|
2,205,107
|
Related party
long-term assets
|
-
|
|
3,000
|
Deferred tax
assets
|
1,115,731
|
|
437,736
|
Other long-term
assets
|
145,300
|
|
12,396
|
Total
assets
|
$
8,046,662
|
|
$
8,369,065
|
LIABILITIES AND
STOCKHOLDERS' (DEFICIT) EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts payable and
accrued expenses
|
$
625,313
|
|
$
587,755
|
Accrued
interest
|
91,655
|
|
80,440
|
Current portion of
deferred revenue
|
1,771,915
|
|
1,632,381
|
Current portion of
deferred credit on executory contracts
|
-
|
|
1,394
|
Current maturities of
long-term debt
|
4,764
|
|
7,482
|
Related party current
liabilities
|
2,840
|
|
4,340
|
Total current
liabilities
|
2,496,487
|
|
2,313,792
|
Deferred
revenue
|
157,609
|
|
151,901
|
Long-term
debt
|
5,443,614
|
|
4,487,419
|
Related party
long-term liabilities
|
10,795
|
|
13,635
|
Deferred tax
liabilities
|
6,681
|
|
-
|
Other long-term
liabilities
|
97,967
|
|
92,481
|
Total
liabilities
|
8,213,153
|
|
7,059,228
|
Stockholders'
(deficit) equity:
|
|
|
|
Preferred stock,
undesignated, par value $0.001 (liquidation preference of $0.001
per share); 50,000 shares authorized and 0 shares issued and
outstanding at December 31, 2015 and December 31, 2014,
respectively
|
-
|
|
-
|
Common stock, par
value $0.001; 9,000,000 shares authorized; 5,153,451 and 5,653,529
shares issued; 5,147,647 and 5,646,119 outstanding at December 31,
2015 and December 31, 2014, respectively
|
5,153
|
|
5,653
|
Accumulated other
comprehensive loss, net of tax
|
(502)
|
|
(402)
|
Additional paid-in
capital
|
4,783,795
|
|
6,771,554
|
Treasury stock, at
cost; 5,804 and 7,410 shares of common stock at December 31, 2015
and December 31, 2014, respectively
|
(23,727)
|
|
(26,034)
|
Accumulated
deficit
|
(4,931,210)
|
|
(5,440,934)
|
Total stockholders'
(deficit) equity
|
(166,491)
|
|
1,309,837
|
Total liabilities and
stockholders' (deficit) equity
|
$
8,046,662
|
|
$
8,369,065
|
SIRIUS XM HOLDINGS
INC. AND SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
For the Twelve
Months Ended December 31,
|
(in
thousands)
|
2015
|
|
2014
|
Cash flows from
operating activities:
|
|
|
|
Net income
|
$
509,724
|
|
$
493,241
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization
|
272,214
|
|
266,423
|
Non-cash interest
expense, net of amortization of premium
|
7,872
|
|
21,039
|
Provision for
doubtful accounts
|
47,237
|
|
44,961
|
Amortization of
deferred income related to equity method investment
|
(2,776)
|
|
(2,776)
|
Gain on
unconsolidated entity investments, net
|
-
|
|
(5,547)
|
Dividend received
from unconsolidated entity investment
|
14,788
|
|
17,019
|
Loss on disposal of
assets
|
7,384
|
|
-
|
Loss on change in
value of derivatives
|
-
|
|
34,485
|
Share-based payment
expense
|
84,310
|
|
78,212
|
Deferred income
taxes
|
365,499
|
|
327,461
|
Other non-cash
purchase price adjustments
|
(1,394)
|
|
(3,781)
|
Changes in operating
assets and liabilities:
|
|
|
|
Receivables
|
(61,440)
|
|
(72,628)
|
Inventory
|
(2,898)
|
|
(5,534)
|
Related party,
net
|
(14,953)
|
|
(4,303)
|
Prepaid expenses and
other current assets
|
(67,204)
|
|
(1,195)
|
Other long-term
assets
|
(130,741)
|
|
3,393
|
Accounts payable and
accrued expenses
|
52,696
|
|
(17,191)
|
Accrued
interest
|
11,215
|
|
38,355
|
Deferred
revenue
|
145,242
|
|
48,645
|
Other long-term
liabilities
|
7,276
|
|
(7,035)
|
Net cash provided by
operating activities
|
1,244,051
|
|
1,253,244
|
Cash flows from
investing activities:
|
|
|
|
Additions to property
and equipment
|
(134,892)
|
|
(121,646)
|
Purchases of
restricted and other investments
|
(3,966)
|
|
-
|
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
|
(138,858)
|
|
(96,324)
|
Cash flows from
financing activities:
|
|
|
|
Proceeds from
exercise of stock options
|
260
|
|
331
|
Taxes paid in lieu of
shares issued for stock-based compensation
|
(54,539)
|
|
(37,318)
|
Proceeds from
long-term borrowings and revolving credit facility, net of
costs
|
1,728,571
|
|
2,406,205
|
Repayment of
long-term borrowings and revolving credit facility
|
(797,117)
|
|
(1,016,420)
|
Common stock
repurchased and retired
|
(2,018,254)
|
|
(2,496,799)
|
Net cash used in
financing activities
|
(1,141,079)
|
|
(1,144,001)
|
Net (decrease)
increase in cash and cash equivalents
|
(35,886)
|
|
12,919
|
Cash and cash
equivalents at beginning of period
|
147,724
|
|
134,805
|
Cash and cash
equivalents at end of period
|
$
111,838
|
|
$
147,724
|
Key Operating
Metrics
The following table contains our key operating metrics based on
our adjusted results of operations for the three and twelve months
ended December 31, 2015 and 2014,
respectively. Subscribers and subscription related revenues and
expenses associated with our connected vehicle services are not
included in our subscriber count or subscriber-based operating
metrics:
|
Unaudited
|
(in thousands,
except per subscriber and per installation amounts)
|
For the Three
Months Ended
December 31,
|
|
For the Twelve
Months Ended
December 31,
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Self-pay
subscribers
|
24,288
|
|
22,523
|
|
24,288
|
|
22,523
|
Paid promotional
subscribers
|
5,306
|
|
4,788
|
|
5,306
|
|
4,788
|
Ending
subscribers
|
29,594
|
|
27,311
|
|
29,594
|
|
27,311
|
|
|
|
|
|
|
|
|
Self-pay
subscribers
|
472
|
|
508
|
|
1,765
|
|
1,441
|
Paid promotional
subscribers
|
162
|
|
69
|
|
517
|
|
311
|
Net additions
(a)
|
634
|
|
577
|
|
2,283
|
|
1,752
|
|
|
|
|
|
|
|
|
Daily weighted
average number of subscribers
|
29,238
|
|
27,022
|
|
28,337
|
|
26,284
|
|
|
|
|
|
|
|
|
Average self-pay
monthly churn
|
1.9%
|
|
1.8%
|
|
1.8%
|
|
1.9%
|
|
|
|
|
|
|
|
|
New vehicle consumer
conversion rate
|
39%
|
|
40%
|
|
40%
|
|
41%
|
|
|
|
|
|
|
|
|
ARPU
|
$
12.75
|
|
$
12.49
|
|
$
12.53
|
|
$
12.38
|
SAC, per
installation
|
$
33
|
|
$
33
|
|
$
33
|
|
$
34
|
Customer service and
billing expenses, per average subscriber
|
$
1.04
|
|
$
1.07
|
|
$
1.01
|
|
$
1.07
|
Free cash
flow
|
$
299,148
|
|
$
330,674
|
|
$
1,315,193
|
|
$
1,155,776
|
Adjusted
EBITDA
|
$
396,235
|
|
$
381,306
|
|
$
1,657,617
|
|
$
1,467,775
|
(a)Note: Amounts may
not sum as a result of rounding.
|
|
|
|
|
|
|
|
Glossary
Adjusted EBITDA – EBITDA is defined as net income
before interest expense, net of amounts capitalized; income tax
expense and depreciation and amortization. We adjust EBITDA to
exclude the impact of other income, loss on disposal of assets,
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 on-going core operating
results period over period, (ii) base our internal budgets and
(iii) compensate management. As such, 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, (iii) share-based payment expense and (iv) other
significant operating expense (income) that do not relate to the
on-going performance of our business. 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 believe the exclusion of share-based payment
expense and loss on disposal of assets is useful as they are not
directly related to the operational conditions of our
business. We also believe the exclusion of settlements
related only to the historical use of pre-1972 sound recordings is
useful as it does not represent an expense incurred as part of
normal operations for the period.
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:
|
Unaudited
|
|
For the Three
Months Ended
December 31,
|
|
For the Twelve
Months Ended
December 31,
|
(in
thousands)
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
Net income
(GAAP):
|
$
134,633
|
|
$
143,122
|
|
$
509,724
|
|
$
493,241
|
Add back items
excluded from Adjusted EBITDA:
|
|
|
|
|
|
|
|
Purchase price
accounting adjustments:
|
|
|
|
|
|
|
|
Revenues
|
1,813
|
|
1,813
|
|
7,251
|
|
7,251
|
Operating
expenses
|
-
|
|
(946)
|
|
(1,394)
|
|
(3,781)
|
Pre-1972 sound
recordings historical legal settlements (GAAP)
|
1,506
|
|
-
|
|
109,164
|
|
-
|
Loss on disposal of
assets (GAAP)
|
7,384
|
|
-
|
|
7,384
|
|
-
|
Loss on change in
value of derivatives (GAAP)
|
-
|
|
-
|
|
-
|
|
34,485
|
Share-based payment
expense (GAAP)
|
21,976
|
|
20,380
|
|
84,310
|
|
78,212
|
Depreciation and
amortization (GAAP)
|
69,687
|
|
66,402
|
|
272,214
|
|
266,423
|
Interest expense, net
of amounts capitalized (GAAP)
|
77,191
|
|
71,981
|
|
299,103
|
|
269,010
|
Other income
(GAAP)
|
(3,302)
|
|
(6,377)
|
|
(12,379)
|
|
(14,611)
|
Income tax expense
(GAAP)
|
85,347
|
|
84,931
|
|
382,240
|
|
337,545
|
Adjusted
EBITDA
|
$
396,235
|
|
$
381,306
|
|
$
1,657,617
|
|
$
1,467,775
|
|
|
|
|
|
|
|
|
Adjusted Net Income and Adjusted Earnings Per
Share - We define these Non-GAAP financial measures as our
actual net income adjusted to exclude the impact of certain
purchase price accounting adjustments, the pre-1972 sound
recordings legal settlements, the loss on disposal of assets, and
the loss on change in value of derivatives, net of income tax
expense. Adjusted earnings per share is derived from adjusted net
income divided by our weighted average common shares outstanding.
The following table reconciles our actual income before income
taxes to our adjusted net income for the three and twelve months
ended December 31, 2015 and 2014:
|
Unaudited
|
|
For the Three
Months Ended
December 31,
|
|
For the Twelve
Months Ended
December 31,
|
(in thousands,
except per share data)
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
Income before income
taxes (GAAP):
|
$
219,980
|
|
$
228,053
|
|
$
891,964
|
|
$
830,786
|
Add back items
excluded from adjusted net income:
|
|
|
|
|
|
|
|
Purchase price
accounting adjustments:
|
|
|
|
|
|
|
|
Revenues
|
1,813
|
|
1,813
|
|
7,251
|
|
7,251
|
Operating
expenses
|
-
|
|
(946)
|
|
(1,394)
|
|
(3,781)
|
Pre-1972 sound
recordings historical legal settlements (GAAP)
|
1,506
|
|
-
|
|
109,164
|
|
-
|
Loss on disposal of
assets (GAAP)
|
7,384
|
|
-
|
|
7,384
|
|
-
|
Loss on change in
value of derivatives (GAAP)
|
-
|
|
-
|
|
-
|
|
34,485
|
Adjusted income
before income taxes
|
$
230,683
|
|
$
228,920
|
|
$
1,014,369
|
|
$
868,741
|
Allocable income tax
expense
|
(89,500)
|
|
(85,254)
|
|
(434,703)
|
|
(352,955)
|
Adjusted net
income
|
$
141,183
|
|
$
143,666
|
|
$
579,666
|
|
$
515,786
|
Adjusted net income
per common share:
|
|
|
|
|
|
|
|
Basic
|
$
0.03
|
|
$
0.03
|
|
$
0.11
|
|
$
0.09
|
Diluted
|
$
0.03
|
|
$
0.03
|
|
$
0.11
|
|
$
0.09
|
Weighted average
common shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
5,195,673
|
|
5,577,325
|
|
5,375,707
|
|
5,788,944
|
Diluted
|
5,247,514
|
|
5,643,839
|
|
5,435,166
|
|
5,862,020
|
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, 2015 and 2014:
|
Unaudited For the
Three Months Ended December 31, 2015
|
(in
thousands)
|
As
Reported
|
|
Purchase Price
Accounting
Adjustments
|
|
Allocation of
Share-based
Payment Expense
|
|
Adjusted
|
|
|
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
|
|
Subscriber
revenue
|
$
998,775
|
|
$
-
|
|
$
-
|
|
$
998,775
|
Advertising
revenue
|
33,449
|
|
-
|
|
-
|
|
33,449
|
Equipment
revenue
|
30,944
|
|
-
|
|
-
|
|
30,944
|
Other
revenue
|
132,978
|
|
1,813
|
|
-
|
|
134,791
|
Total
revenue
|
$
1,196,146
|
|
$
1,813
|
|
$
-
|
|
$
1,197,959
|
Operating
expenses
|
|
|
|
|
|
|
|
Cost of
services:
|
|
|
|
|
|
|
|
Revenue share and
royalties
|
$
251,717
|
|
$
-
|
|
$
-
|
|
$
251,717
|
Programming and
content
|
76,868
|
|
-
|
|
(3,080)
|
|
73,788
|
Customer service and
billing
|
99,387
|
|
-
|
|
(818)
|
|
98,569
|
Satellite and
transmission
|
28,848
|
|
-
|
|
(991)
|
|
27,857
|
Cost of
equipment
|
13,703
|
|
-
|
|
-
|
|
13,703
|
Subscriber
acquisition costs
|
140,826
|
|
-
|
|
-
|
|
140,826
|
Sales and
marketing
|
98,411
|
|
-
|
|
(4,929)
|
|
93,482
|
Engineering, design
and development
|
17,223
|
|
-
|
|
(2,407)
|
|
14,816
|
General and
administrative
|
105,607
|
|
-
|
|
(9,751)
|
|
95,856
|
Depreciation and
amortization (a)
|
69,687
|
|
-
|
|
-
|
|
69,687
|
Share-based payment
expense
|
-
|
|
-
|
|
21,976
|
|
21,976
|
Total operating
expenses
|
$
902,277
|
|
$
-
|
|
$
-
|
|
$
902,277
|
|
|
|
|
|
|
|
|
(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, 2015 was
$8,000.
|
|
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
Twelve Months Ended December 31, 2015
|
(in
thousands)
|
As
Reported
|
|
Purchase Price
Accounting
Adjustments
|
|
Allocation of
Share-based
Payment Expense
|
|
Adjusted
|
|
|
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
|
|
Subscriber
revenue
|
$
3,824,793
|
|
$
-
|
|
$
-
|
|
$
3,824,793
|
Advertising
revenue
|
122,292
|
|
-
|
|
-
|
|
122,292
|
Equipment
revenue
|
110,923
|
|
-
|
|
-
|
|
110,923
|
Other
revenue
|
512,050
|
|
7,251
|
|
-
|
|
519,301
|
Total
revenue
|
$
4,570,058
|
|
$
7,251
|
|
$
-
|
|
$
4,577,309
|
Operating
expenses
|
|
|
|
|
|
|
|
Cost of
services:
|
|
|
|
|
|
|
|
Revenue share and
royalties
|
$
1,034,832
|
|
$
-
|
|
$
-
|
|
$
1,034,832
|
Programming and
content
|
293,091
|
|
1,394
|
|
(10,325)
|
|
284,160
|
Customer service and
billing
|
377,908
|
|
-
|
|
(2,982)
|
|
374,926
|
Satellite and
transmission
|
94,609
|
|
-
|
|
(4,147)
|
|
90,462
|
Cost of
equipment
|
42,724
|
|
-
|
|
-
|
|
42,724
|
Subscriber
acquisition costs
|
532,599
|
|
-
|
|
-
|
|
532,599
|
Sales and
marketing
|
354,189
|
|
-
|
|
(17,985)
|
|
336,204
|
Engineering, design
and development
|
64,403
|
|
-
|
|
(9,470)
|
|
54,933
|
General and
administrative
|
324,801
|
|
-
|
|
(39,401)
|
|
285,400
|
Depreciation and
amortization (a)
|
272,214
|
|
-
|
|
-
|
|
272,214
|
Share-based payment
expense
|
-
|
|
-
|
|
84,310
|
|
84,310
|
Total operating
expenses
|
$
3,391,370
|
|
$
1,394
|
|
$
-
|
|
$
3,392,764
|
|
|
|
|
|
|
|
|
(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 twelve months ended December 31, 2015 was
$35,000.
|
|
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 twelve months ended December 31, 2014 was
$39,000.
|
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, share-based payment expense, the pre-1972
sound recordings historical legal settlements, and the loss on
disposal of assets. The following table reconciles our actual
operating expenses to our adjusted cash operating expenses for the
three and twelve months ended December 31,
2015 and 2014:
|
Unaudited
|
|
For the Three
Months Ended
December 31,
|
|
For the Twelve
Months Ended
December 31,
|
(in
thousands)
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Operating expenses
(GAAP):
|
$
902,277
|
|
$
797,295
|
|
$
3,391,370
|
|
$
3,061,425
|
Items excluded from
adjusted cash operating expenses:
|
|
|
|
|
|
|
|
Purchase price
accounting adjustments
|
-
|
|
946
|
|
1,394
|
|
3,781
|
Pre-1972 sound
recordings historical legal settlements (GAAP)
|
(1,506)
|
|
-
|
|
(109,164)
|
|
-
|
Loss on disposal of
assets (GAAP)
|
(7,384)
|
|
-
|
|
(7,384)
|
|
-
|
Share-based payment
expense (GAAP)
|
(21,976)
|
|
(20,380)
|
|
(84,310)
|
|
(78,212)
|
Depreciation and
amortization (GAAP)
|
(69,687)
|
|
(66,402)
|
|
(272,214)
|
|
(266,423)
|
Adjusted cash
operating expenses
|
$
801,724
|
|
$
711,459
|
|
$
2,919,692
|
|
$
2,720,571
|
ARPU - is derived from total earned subscriber
revenue, advertising revenue and other subscription-related
revenue, excluding revenue associated with our connected vehicle
business, 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:
|
Unaudited
|
|
For the Three
Months Ended
December 31,
|
|
For the Twelve
Months Ended
December 31,
|
(in thousands,
except per subscriber amounts)
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
Subscriber revenue,
excluding connected vehicle (GAAP)
|
$
973,347
|
|
$
897,308
|
|
$ 3,726,340
|
|
$ 3,466,050
|
Add: advertising
revenue (GAAP)
|
33,449
|
|
27,970
|
|
122,292
|
|
100,982
|
Add: other
subscription-related revenue (GAAP)
|
111,207
|
|
87,270
|
|
410,644
|
|
336,408
|
|
$ 1,118,003
|
|
$ 1,012,548
|
|
$ 4,259,276
|
|
$ 3,903,440
|
|
|
|
|
|
|
|
|
Daily weighted
average number of subscribers
|
29,238
|
|
27,022
|
|
28,337
|
|
26,284
|
|
|
|
|
|
|
|
|
ARPU
|
$
12.75
|
|
$
12.49
|
|
$
12.53
|
|
$
12.38
|
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:
|
|
|
|
|
|
|
|
|
Unaudited
|
|
For the Three
Months Ended
December 31,
|
|
For the Twelve
Months Ended
December 31,
|
(in thousands,
except per subscriber amounts)
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
Customer service and
billing expenses, excluding connected vehicle (GAAP)
|
$
91,686
|
|
$
87,417
|
|
$
346,789
|
|
$
340,094
|
Less: share-based
payment expense (GAAP)
|
(818)
|
|
(748)
|
|
(2,982)
|
|
(2,780)
|
|
$
90,868
|
|
$
86,669
|
|
$
343,807
|
|
$
337,314
|
|
|
|
|
|
|
|
|
Daily weighted
average number of subscribers
|
29,238
|
|
27,022
|
|
28,337
|
|
26,284
|
|
|
|
|
|
|
|
|
Customer service and
billing expenses, per average subscriber
|
$
1.04
|
|
$
1.07
|
|
$
1.01
|
|
$
1.07
|
Free cash flow and free cash flow per diluted
share - are derived from cash flow provided by operating
activities, net of additions to property and equipment, restricted
and other investment activity, and the return of capital from
investment in unconsolidated entity, excluding the $210,000 pre-1972 sound recordings legal
settlement payment. The calculation for free cash flow and free
cash flow per diluted share are as follows:
|
Unaudited
|
|
For the Three
Months Ended
December 31,
|
|
For the Twelve
Months Ended
December 31,
|
(in thousands,
except per share data)
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
Cash Flow
information
|
|
|
|
|
|
|
|
Net cash provided by
operating activities
|
$
343,097
|
|
$
365,076
|
|
$
1,244,051
|
|
$
1,253,244
|
Net cash used in
investing activities
|
$
(43,949)
|
|
$
(34,402)
|
|
$
(138,858)
|
|
$
(96,324)
|
Net cash used in
financing activities
|
$
(339,855)
|
|
$
(286,535)
|
|
$
(1,141,079)
|
|
$
(1,144,001)
|
Free Cash
Flow
|
|
|
|
|
|
|
|
Net cash provided by
operating activities
|
$
343,097
|
|
$
365,076
|
|
$
1,244,051
|
|
$
1,253,244
|
Additions to property
and equipment
|
(43,949)
|
|
(34,402)
|
|
(134,892)
|
|
(121,646)
|
Purchases of
restricted and other investments
|
-
|
|
-
|
|
(3,966)
|
|
-
|
Return of capital
from investment in unconsolidated entity
|
-
|
|
-
|
|
-
|
|
24,178
|
Pre-1972 sound
recordings legal settlement
|
-
|
|
-
|
|
210,000
|
|
-
|
Free cash
flow
|
$
299,148
|
|
$
330,674
|
|
$
1,315,193
|
|
$
1,155,776
|
|
|
|
|
|
|
|
|
Diluted weighted
average common shares outstanding
|
5,247,514
|
|
5,643,839
|
|
5,435,166
|
|
5,862,020
|
|
|
|
|
|
|
|
|
Free cash flow per
diluted share
|
$
0.06
|
|
$
0.06
|
|
$
0.24
|
|
$
0.20
|
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, divided by the
number of satellite radio installations in new vehicles and
shipments of aftermarket radios for the period. SAC, per
installation, is calculated as follows:
|
Unaudited
|
|
For the Three
Months Ended
December 31,
|
|
For the Twelve
Months Ended
December 31,
|
(in thousands,
except per installation amounts)
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
Subscriber
acquisition costs (GAAP)
|
$
140,826
|
|
$
126,257
|
|
$
532,599
|
|
$
493,464
|
Less: margin from
direct sales of radios and accessories (GAAP)
|
(17,241)
|
|
(14,860)
|
|
(68,199)
|
|
(60,264)
|
|
$
123,585
|
|
$
111,397
|
|
$
464,400
|
|
$
433,200
|
|
|
|
|
|
|
|
|
Installations
|
3,736
|
|
3,391
|
|
14,041
|
|
12,788
|
|
|
|
|
|
|
|
|
SAC, per
installation
|
$
33
|
|
$
33
|
|
$
33
|
|
$
34
|
About SiriusXM
Sirius XM Holdings Inc. (NASDAQ: SIRI) is the world's largest
radio broadcaster measured by revenue and has 29.6 million
subscribers. SiriusXM creates and broadcasts commercial-free
music; premier sports talk and live events; comedy; news; exclusive
talk and entertainment, and a wide-range of Latin music, sports and
talk programming. SiriusXM is available in vehicles from
every major car company in the U.S. and on smartphones and other
connected devices as well as online at siriusxm.com. SiriusXM
radios and accessories are available from retailers nationwide and
online at SiriusXM. SiriusXM also provides premium traffic,
weather, data and information services for subscribers in cars,
trucks, and RVs through SiriusXM Trafficâ„¢, SiriusXM Travel Link,
NavTraffic®, NavWeather™. SiriusXM delivers critical weather,
data and information services to aircraft and boats through
SiriusXM Aviation, SiriusXM Marineâ„¢, Sirius
Marine Weather, XMWX Aviationâ„¢, XMWX Weather, and XMWX
Marineâ„¢. In addition, SiriusXM Music for
Business provides commercial-free music to a variety of
businesses. SiriusXM holds a minority interest in SiriusXM
Canada which has more than 2.7 million subscribers. SiriusXM is
also a leading provider of connected vehicles services to major
automakers, giving customers access to a suite of safety, security,
and convenience services including automatic crash notification,
stolen vehicle recovery assistance, enhanced roadside assistance
and turn-by-turn navigation.
To download SiriusXM logos and artwork, visit
http://www.siriusxm.com/LogosAndPhotos.
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 service
providers; our ability to attract and retain subscribers, which is
uncertain; our dependence upon the auto industry; general economic
conditions; changes in consumer protection laws and their
enforcement; the security of the personal information about our
customers; other existing or future government laws and regulations
could harm our business; failure of our satellites would
significantly damage our business; the interruption or failure of
our information technology and communications systems; 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 or other strategic initiatives; rapid
technological and industry changes; failure of third parties to
perform; failure to comply with FCC requirements; modifications to
our business plans; our indebtedness; and our principal stockholder
has significant influence over our management and over actions
requiring stockholder approval and its interests may differ from
interests of other holders of our common stock. 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, 2014, 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.
Source: SiriusXM
Contact for SiriusXM:
Hooper Stevens
212-901-6718
Hooper.stevens@siriusxm.com
Chris Leal
212-584-5236
Chris.leal@siriusxm.com
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To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/siriusxm-reports-fourth-quarter-and-full-year-2015-results-300213410.html
SOURCE Sirius XM Holdings Inc.