Sirius Results
Breaking News
Sirius Reports Fourth Quarter and Full Year 2006 Results
07:00 EST Tuesday, February 27, 2007
- Achieves First-Ever Quarter of Positive Cash Flow from Operations and Free Cash Flow
- 2006 Revenue Increases 163% to a Record $637 Million
- Highest Satellite Radio Subscriber Share in Company's History
- 2007 Outlook For More Than 8 Million Subscribers and Revenue Approaching $1 Billion
- Executed Definitive Merger Agreement with XM Satellite Radio
NEW YORK, Feb. 27 /PRNewswire-FirstCall/ -- SIRIUS Satellite Radio (Nasdaq: SIRI) today announced record full year and fourth quarter 2006 results driven by an 82% increase in subscribers to more than 6 million, positive free cash flow in the fourth quarter and the highest satellite radio subscriber market share in the company's history.
(Logo: https://www.newscom.com/cgi-bin/prnh/19991118/NYTH125 )
"In 2006, SIRIUS added 2.7 million new subscribers, an annual record for satellite radio, and captured 62% share of satellite radio subscriber growth. More importantly, SIRIUS achieved positive free cash flow in the fourth quarter 2006 -- four years after adding our first subscriber," said Mel Karmazin, CEO of SIRIUS. "The fourth quarter marked the fifth consecutive quarter of satellite radio subscriber leadership for SIRIUS and a record 67% of satellite radio growth. We look forward to another year of strong growth in 2007, anticipating that we will approach $1 billion in total revenue. The pending merger with XM will offer unprecedented choice for consumers and create tremendous value for our shareholders."
SIRIUS ended 2006 with 6,024,555 subscribers, up 82% from 3,316,560 subscribers at the end of 2005. Retail subscribers increased 64% in 2006 to 4,041,826 from 2005 retail subscribers of 2,465,363. OEM subscribers increased 138% in 2006 to 1,959,009 from 823,693 at the end of 2005. During the fourth quarter 2006, SIRIUS added 905,247 subscribers, or 67% of satellite radio net additions.
Total revenue for 2006 increased to $637.2 million, up 163% from 2005 total revenue of $242.2 million. Fourth quarter 2006 total revenue of $193.4 million increased 142% from fourth quarter 2005 revenue of $80.0 million. Average monthly revenue per subscriber (or "ARPU") was $11.01 in 2006 up from $10.34 in 2005. 2006 ARPU included a $0.56 contribution from net advertising revenue, up 100% from the $0.28 contribution from net advertising revenue reported in 2005. Average monthly churn for 2006 was 1.9% reflecting total churn from both retail and OEM channels. SAC per gross subscriber addition was $114 for 2006 improving 18% over 2005's SAC per gross subscriber addition of $139.
SIRIUS reported a net loss of ($1.1) billion, or ($0.79) per share, for 2006. The adjusted net loss for 2006 (adjusted to primarily exclude stock-based compensation) improved to ($656.0) million for 2006, and the adjusted loss from operations improved to ($513.1) million versus 2006 guidance of ($565) million. The free cash flow loss for the full year of 2006 was ($500.7) million, in-line with previous guidance.
In the fourth quarter 2006, SIRIUS reported a net loss of ($245.6) million, or ($0.17) per share. The adjusted net loss (adjusted to primarily exclude stock-based compensation) improved to ($203.0) million for the fourth quarter, and the adjusted loss from operations improved to ($166.8) million.
The company posted positive free cash flow in the fourth quarter 2006 of $30.4 million, solidly reaching its goal of positive free cash flow as early as the fourth quarter of 2006. The definition of free cash flow is the sum of net cash provided by (used in) operating activities, capital expenditures and restricted and other investment activity.
2007 OUTLOOK
SIRIUS today provided the following guidance for the full year 2007:
-- Total revenue approaching $1 billion
-- More than 8 million subscribers at year-end
-- Average monthly subscriber churn of approximately 2.2 - 2.4%
-- SAC per gross subscriber addition of approximately $95
In light of the pending merger with XM, and the uncertainty surrounding the timing and financial impact, the company is no longer currently providing cash flow guidance. See section on the pending merger of equals with XM Satellite Radio Holdings Inc.
2006 HIGHLIGHTS - "The Best Radio on Radio"
MUSIC, TALK AND ENTERTAINMENT LEADER
2006 was an unprecedented year for new and exclusive programming from SIRIUS with the launch of the new advertising campaign, "The Best Radio on Radio." SIRIUS offers 69 channels of 100% commercial free music programming covering a broad array of music genres.
SIRIUS has an unmatched lineup of programming, with over 65 channels of sports, news, talk, entertainment, traffic, weather and data from such top names as Howard Stern, Jamie Foxx, CNBC, CNN, Martha Stewart, Tony Hawk, Richard Simmons, Jimmy Buffett, ABC News, BBC World Service, Maxim, NPR, Radio Disney and Barbara Walters.
SIRIUS talk programming encompasses comedy, public affairs, the arts, the trucking life and represents a full political spectrum from liberal "left" to conservative "right." Around-the-clock traffic and weather reports covering the top 20 US traffic markets are also available nationwide. During 2006, SIRIUS announced a broad array of new programming including two full-time Howard Stern channels, Deepak Chopra, Cosmo Radio, Barbara Walters, the Catholic Channel, the Metropolitan Opera, Blue Collar Radio, NASCAR's Tony Stewart show and Playboy Radio.
SPORTS LEADER
SIRIUS is the leading provider of sports radio programming, broadcasting play-by-play action of more than 350 professional and college teams. SIRIUS features sports news and talk and play-by-play action from the NFL, NASCAR, NBA, NHL, Barclays English Premier League soccer, UEFA Champions League, the Wimbledon Championships, NCAA(R) Division 1 Men's Basketball Championship (March 13 - April 2) and more than 150 colleges and universities, plus live coverage of several of the years top thoroughbred horse races. SIRIUS is the only radio outlet to provide listeners with live coverage of every NFL game and starting in 2007 will air every NASCAR Nextel Cup Series, NASCAR Busch Series and NASCAR Craftsman Truck Series race. SIRIUS also broadcasts over 1,000 NBA games per season, plus up to 40 NHL games per week and features programming from ESPN Radio and ESPNews.
On Super Bowl Sunday SIRIUS offered ten different game calls of Super Bowl XLI in seven languages, including both teams' local radio broadcasts.
RESULTS OF OPERATIONS
The discussion of operating expenses below excludes the effects of stock- based compensation. The company believes this presentation improves the transparency of disclosure and is consistent with the way operating results are evaluated.
FOURTH QUARTER 2006 VERSUS FOURTH QUARTER 2005
For the fourth quarter of 2006, SIRIUS recognized total revenue of $193.4 million compared with $80.0 million for the fourth quarter of 2005. This 142%, or $113.4 million, increase in revenue was driven by a $99.4 million increase in subscriber revenue resulting from the net increase in subscribers of 2,707,995, or 82%, from December 31, 2005 to December 31, 2006; a $5.4 million increase in net advertising revenue; and a $7.5 million increase in equipment revenue.
The company's adjusted loss from operations decreased $59.5 million to ($166.8) million for the fourth quarter of 2006 from ($226.3) million for the fourth quarter of 2005 (refer to the reconciliation table of net loss to adjusted loss from operations). This decrease was primarily driven by an increase in total revenue of $113.4 million, which more than offset a $53.9 million increase in operating expenses.
Programming and content expenses increased $29.8 million to $64.8 million for the fourth quarter of 2006 from $35.0 million for the fourth quarter of 2005. The increase was primarily attributable to license fees and talent costs associated with new programming, including the Howard Stern show which launched in January 2006, and higher broadcast and webstreaming royalties as a result of the company's larger subscriber base.
Customer service and billing expenses increased $3.9 million to $23.9 million for the fourth quarter of 2006 from $20.0 million for the fourth quarter of 2005. The increase was primarily attributable to call center operating costs necessary to accommodate the increase in the company's subscriber base and transaction fees due to the addition of new subscribers. Customer service and billing expenses per average subscriber per month declined 44% to $1.49 for the fourth quarter of 2006 from $2.66 for the fourth quarter of 2005.
Cost of equipment increased $14.7 million to $22.1 million for the fourth quarter of 2006 from $7.4 million for the fourth quarter of 2005. The increase was primarily attributable to higher sales volume and per unit costs as the company continued to introduce new products through the direct to consumer distribution channel.
Sales and marketing expenses increased $22.1 million to $85.1 million for the fourth quarter of 2006 from $63.0 million for the fourth quarter of 2005. This 35% increase in sales and marketing expenses compared with a 142% increase in total revenue from $80.0 million for the fourth quarter of 2005 to $193.4 million for the fourth quarter of 2006. The increase in sales and marketing expenses was primarily attributable to increased OEM revenue share as a result of a 138% increase in the company's OEM subscriber base, as well as increased cooperative marketing and advertising costs.
Subscriber acquisition costs decreased $24.2 million to $121.0 million for the fourth quarter of 2006 from $145.2 million for the fourth quarter of 2005. The decrease was primarily attributable to lower commissions and decreased aftermarket hardware subsidies as the company continued to reduce manufacturing and chip set costs, offset by increased OEM hardware subsidies due to higher production volume and costs related to FM transmitter compliance with FCC rules.
SAC per gross subscriber addition decreased 9% from $113 for the fourth quarter of 2005 to $103 for the fourth quarter of 2006 primarily due to lower average commission rates and decreased aftermarket average subsidy rates as the company continued to reduce manufacturing and chip set costs, offset by the per subscriber effect of costs related to FM transmitter compliance with FCC rules.
General and administrative expenses increased $6.3 million to $23.2 million for the fourth quarter of 2006 from $16.9 million for the fourth quarter of 2005. The increase was primarily a result of employment-related costs, legal fees and bad debt expense to support the growth of the business.
For the fourth quarter of 2005, the company recorded ($6.2) million for its share of SIRIUS Canada Inc.'s net loss.
YEAR ENDED DECEMBER 31, 2006 VERSUS YEAR ENDED DECEMBER 31, 2005
For the year ended December 31, 2006, SIRIUS recognized total revenue of $637.2 million compared with $242.2 million for the year ended December 31, 2005. This 163%, or $395.0 million, increase in revenue was driven by a $351.8 million increase in subscriber revenue resulting from the net increase in subscribers of 2,707,995, or 82%, from December 31, 2005 to December 31, 2006; a $24.9 million increase in net advertising revenue; and a $14.5 million increase in equipment revenue.
The company's adjusted loss from operations decreased $54.4 million to ($513.1) million for the year ended December 31, 2006 from ($567.5) million for the year ended December 31, 2005 (refer to the reconciliation table of net loss to adjusted loss from operations). This decrease was primarily driven by an increase in total revenue of $395.0 million, which more than offset a $340.6 million increase in operating expenses.
Satellite and transmission expenses increased $11.3 million to $39.2 million for the year ended December 31, 2006 from $27.9 million for the year ended December 31, 2005. The increase was primarily attributable to an impairment charge in the second quarter of 2006 associated with certain satellite long-lead time parts purchased in 1999 that will no longer be needed as a result of the company's new satellite contract announced in 2006.
Programming and content expenses increased $131.6 million to $230.2 million for the year ended December 31, 2006 from $98.6 million for the year ended December 31, 2005. The increase was primarily attributable to license fees and talent costs associated with new programming, including the Howard Stern show which launched in January 2006, and higher broadcast and webstreaming royalties as a result of the company's larger subscriber base.
Customer service and billing expenses increased $21.5 million to $68.1 million for the year ended December 31, 2006 from $46.6 million for the year ended December 31, 2005. The increase was primarily attributable to call center operating costs necessary to accommodate the increase in the company's subscriber base and transaction fees due to the addition of new subscribers. Customer service and billing expenses per average subscriber per month declined 41% to $1.24 for the year ended December 31, 2006 from $2.10 for the year ended December 31, 2005.
Cost of equipment increased $23.4 million to $35.2 million for the year ended December 31, 2006 from $11.8 million for the year ended December 31, 2005. The increase was primarily attributable to higher sales volume and per unit costs as the company continued to introduce new products through the direct to consumer distribution channel.
Sales and marketing expenses increased $51.9 million to $222.5 million for the year ended December 31, 2006 from $170.6 million for the year ended December 31, 2005. This 30% increase in sales and marketing expenses compared with a 163% increase in total revenue from $242.2 million for the year ended December 31, 2005 to $637.2 million for the year ended December 31, 2006. The increase in sales and marketing expenses was primarily attributable to increased retail residuals; OEM revenue share as a result of a 138% increase in the company's OEM subscriber base; cooperative marketing and advertising costs; and compensation related costs.
Subscriber acquisition costs increased $70.1 million to $419.7 million for the year ended December 31, 2006 from $349.6 million for the year ended December 31, 2005. The increase was primarily attributable to decreased aftermarket hardware subsidies as the company continued to reduce manufacturing and chip set costs, offset by increased OEM hardware subsidies due to higher production volume and costs related to FM transmitter compliance with FCC rules.
SAC per gross subscriber addition decreased 18% from $139 for the year ended December 31, 2005 to $114 for the year ended December 31, 2006 primarily due to lower average commission rates and decreased aftermarket and OEM average subsidy rates as the company continued to reduce manufacturing and chip set costs, offset by the per subscriber effect of costs related to FM transmitter compliance with FCC rules.
General and administrative expenses increased $27.7 million to $87.5 million for the year ended December 31, 2006 from $59.8 million for the year ended December 31, 2005. The increase was primarily a result of employment- related costs, legal fees and bad debt expense to support the growth of the business.
Engineering, design and development expenses increased $14.0 million to $58.7 million for the year ended December 31, 2006 from $44.7 million for the year ended December 31, 2005 primarily as a result of costs associated with OEM tooling and manufacturing upgrades and receiver integration for factory installations of SIRIUS radios; development costs associated with the manufacturing of SIRIUS radios; and additional personnel-related costs to support research and development efforts.
In September 2005, the company also recorded a ($6.2) million loss from the redemption of its 15% Senior Secured Discount Notes due 2007 and 141/2% Senior Secured Notes due 2009.
For the year ended December 31, 2006 and 2005, the company recorded ($4.4) million and ($6.9) million, respectively, for its share of SIRIUS Canada, Inc.'s net loss.
SIRIUS reported a net loss of ($1.1) billion, or ($0.79) per share, for the year ended December 31, 2006, including a ($0.01) per share impact from the impairment loss and ($0.31) per share impact from stock-based charges, compared with a net loss of ($863.0) million, or ($0.65) per share, for the year ended December 31, 2005, including a ($0.12) per share impact from stock- based charges. The adjusted net loss per share, or net loss per share excluding the impairment loss and stock-based charges, was ($0.47) for the year ended December 31, 2006 compared with an adjusted net loss per share of ($0.53) for the year ended December 31, 2005 (refer to the reconciliation table of net loss per share to adjusted net loss per share).
PENDING MERGER OF EQUALS WITH XM
On February 19, 2007, XM Satellite Radio and SIRIUS announced a definitive agreement, under which the companies will be combined in a tax-free, all-stock merger of equals. XM shareholders will receive 4.6 shares of SIRIUS common stock for each share of XM they own. XM and SIRIUS shareholders will each own approximately 50 percent of the combined company.
The transaction is subject to approval by both companies' shareholders, the satisfaction of customary closing conditions and regulatory review and approvals, including antitrust agencies and the FCC. The companies expect the transaction to be completed by the end of 2007.
The companies filed their Merger Agreement with the Securities and Exchange Commission on a Form 8-K on February 21, 2007.
This communication is being made in respect of the proposed business combination involving SIRIUS and XM. In connection with the proposed transaction, SIRIUS plans to file with the SEC a Registration Statement on Form S-4 containing a Joint Proxy Statement/Prospectus and each of SIRIUS and XM plan to file with the SEC other documents regarding the proposed transaction. The definitive Joint Proxy Statement/Prospectus will be mailed to stockholders of SIRIUS and XM. INVESTORS AND SECURITY HOLDERS OF SIRIUS AND XM ARE URGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS AND OTHER DOCUMENTS FILED WITH THE SEC CAREFULLY IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. Investors and security holders will be able to obtain free copies of the Registration Statement and the Joint Proxy Statement/Prospectus (when available) and other documents filed with the SEC by SIRIUS and XM through the web site maintained by the SEC at www.sec.gov. Free copies of the Registration Statement and the Joint Proxy Statement/Prospectus (when available) and other documents filed with the SEC can also be obtained by directing a request to Sirius Satellite Radio Inc., 1221 Avenue of the Americas, New York, NY 10020, Attention: Investor Relations or by directing a request to XM Satellite Radio Holdings Inc., 1500 Eckington Place, NE. Washington, DC 20002, Attention: Investor Relations.
SIRIUS, XM and their respective directors and executive officers and other persons may be deemed to be participants in the solicitation of proxies in respect of the proposed transaction. Information regarding SIRIUS' directors and executive officers is available in its Annual Report on Form 10-K for the year ended December 31, 2005, which was filed with the SEC on March 13, 2006, and its proxy statement for its 2006 annual meeting of stockholders, which was filed with the SEC on April 21, 2006, and information regarding XM's directors and executive officers is available in XM's Annual Report on Form 10-K, for the year ended December 31, 2005, which was filed with the SEC on March 3, 2006 and its proxy statement for its 2006 annual meeting of stockholders, which was filed with the SEC on April 25, 2006. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the Joint Proxy Statement/Prospectus and other relevant materials to be filed with the SEC when they become available.
Sirius Satellite Radio Inc. and Subsidiaries
Subscriber Data, Metrics and Other Non-GAAP Financial Measures
(Dollars in thousands, unless otherwise stated)
(Unaudited)
Subscribers:
For the Three Months For the Years
Ended December 31, Ended December 31,
2006 2005 2006 2005
Beginning subscribers 5,119,308 2,173,920 3,316,560 1,143,258
Net additions 905,247 1,142,640 2,707,995 2,173,302
Ending subscribers 6,024,555 3,316,560 6,024,555 3,316,560
Retail 4,041,826 2,465,363 4,041,826 2,465,363
OEM 1,959,009 823,693 1,959,009 823,693
Hertz 23,720 27,504 23,720 27,504
Ending subscribers 6,024,555 3,316,560 6,024,555 3,316,560
Retail 559,312 900,645 1,576,463 1,554,108
OEM 348,935 241,705 1,135,316 620,224
Hertz (3,000) 290 (3,784) (1,030)
Net additions 905,247 1,142,640 2,707,995 2,173,302
Metrics:
For the Three Months For the Years
Ended December 31, Ended December 31,
2006 2005 2006 2005
Gross subscriber
additions 1,234,576 1,266,674 3,758,163 2,519,301
Deactivated
subscribers 329,329 124,034 1,050,168 345,999
Free cash flow
(1)(6) $30,409 $ (62,551) $(500,715) $(333,922)
Average monthly
churn (2)(6) 2.0% 1.5% 1.9% 1.5%
SAC per gross subscriber
addition (3)(6) $103 $113 $114 $139
Customer service and
billing expenses
per average
subscriber (4)(6) $1.49 $2.66 $1.24 $2.10
Total revenue $193,380 $80,004 $637,235 $242,245
Monthly ARPU:
Average monthly subscriber
revenue per subscriber
before effects of Hertz
subscribers and
mail-in rebates $10.48 $10.76 $10.63 $10.78
Effects of Hertz
subscribers 0.05 0.03 0.05 0.04
Effects of mail-in
rebates (0.14) (1.77) (0.23) (0.76)
Average monthly
subscriber revenue
per subscriber 10.39 9.02 10.45 10.06
Average monthly net
advertising
revenue per
subscriber 0.53 0.40 0.56 0.28
ARPU (5)(6) $10.92 $9.42 $11.01 $10.34
Sirius Satellite Radio Inc. and Subsidiaries
Subscriber Data, Metrics and Other Non-GAAP Financial Measures - Continued
(Dollars in thousands, unless otherwise stated)
(Unaudited)
Adjusted Loss from Operations:
For the Three Months For the Years
Ended December 31, Ended December 31,
2006 2005 2006 2005
Net loss $(245,597) $(311,389) $(1,104,867) $(862,997)
Impairment loss - - 10,917 -
Depreciation 27,495 24,915 105,749 98,555
Stock-based compensation 42,625 46,196 437,918 163,078
Other income (expense) 8,512 13,378 35,078 31,546
Income tax expense 156 631 2,065 2,311
Adjusted loss from
operations (7) $(166,809) $(226,269) $(513,140) $(567,507)
Adjusted Net Loss and Adjusted Net Loss per Share:
For the Three Months For the Years
Ended December 31, Ended December 31,
2006 2005 2006 2005
Net loss $(245,597) $(311,389) $(1,104,867) $(862,997)
Impairment loss - - 10,917 -
Stock-based
compensation 42,625 46,196 437,918 163,078
Adjusted net loss (8) $(202,972) $(265,193) $(656,032) $(699,919)
Net loss per share (basic
and diluted) $(0.17) $(0.23) $(0.79) $(0.65)
Impairment loss - - 0.01 -
Stock-based compensation 0.03 0.03 0.31 0.12
Adjusted net loss per share
(basic and diluted) (8) $(0.14) $(0.20) $(0.47) $(0.53)
Weighted average common
shares outstanding
(basic and diluted) 1,413,866 1,335,650 1,402,619 1,325,739
Sirius Satellite Radio Inc. and Subsidiaries
Subscriber Data, Metrics and Other Non-GAAP Financial Measures - Continued
(Dollars in thousands, unless otherwise stated)
(Unaudited)
Condensed Consolidated Statements of Operations:
For the Three Months For the Years
Ended December 31, Ended December 31,
2006 2005 2006 2005
Total revenue $193,380 $80,004 $637,235 $242,245
Operating expenses:
Satellite and
transmission 7,152 7,147 39,229 27,856
Programming and content 64,843 35,018 230,215 98,607
Customer service
and billing 23,919 20,007 68,137 46,653
Cost of equipment 22,105 7,446 35,233 11,827
Sales and marketing 85,113 63,049 222,492 170,592
Subscriber acquisition
costs 121,046 145,180 419,716 349,641
General and
administrative 23,224 16,913 87,538 59,831
Engineering, design and
development 12,787 11,513 58,732 44,745
Depreciation 27,495 24,915 105,749 98,555
Stock-based compensation 42,625 46,196 437,918 163,078
Total operating
expenses 430,309 377,384 1,704,959 1,071,385
Loss from operations (236,929) (297,380) (1,067,724) (829,140)
Other income (expense) (8,512) (13,378) (35,078) (31,546)
Loss before income taxes (245,441) (310,758) (1,102,802) (860,686)
Income tax expense (156) (631) (2,065) (2,311)
Net loss $(245,597) $(311,389) $(1,104,867) $(862,997)
Sirius Satellite Radio Inc. and Subsidiaries
Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
For the Three Months For the Years
Ended December 31, Ended December 31,
2006 2005 2006 2005
Revenue:
Subscriber revenue,
including effects of
mail-in rebates $167,210 $67,816 $575,404 $223,615
Advertising revenue,
net of agency fees 8,451 3,037 31,044 6,131
Equipment revenue 16,431 8,971 26,798 12,271
Other revenue 1,288 180 3,989 228
Total revenue 193,380 80,004 637,235 242,245
Operating expenses
(excludes depreciation
shown separately below) (1):
Cost of services:
Satellite and
transmission 7,518 7,634 41,797 29,798
Programming and content 89,478 39,694 551,989 118,076
Customer service and
billing 24,086 20,151 68,949 47,202
Cost of equipment 22,105 7,446 35,233 11,827
Sales and marketing 89,778 74,850 242,035 212,741
Subscriber acquisition
costs 122,196 163,774 451,614 399,350
General and
administrative 34,205 22,891 137,466 87,555
Engineering, design
and development 13,448 16,029 70,127 66,281
Depreciation 27,495 24,915 105,749 98,555
Total operating expenses 430,309 377,384 1,704,959 1,071,385
Loss from operations (236,929) (297,380) (1,067,724) (829,140)
Other income (expense):
Interest and investment
income 6,760 9,956 33,320 26,878
Interest expense, net of
amounts capitalized (15,327) (17,142) (64,032) (45,361)
Loss from redemption
of debt - - - (6,214)
Equity in net loss
of affiliate - (6,199) (4,445) (6,938)
Other income 55 7 79 89
Total other income
(expense) (8,512) (13,378) (35,078) (31,546)
Loss before income
taxes (245,441) (310,758) (1,102,802) (860,686)
Income tax expense (156) (631) (2,065) (2,311)
Net loss $(245,597) $(311,389) $(1,104,867) $(862,997)
Net loss per share
(basic and diluted) $(0.17) $(0.23) $(0.79) $(0.65)
Weighted average common
shares outstanding
(basic and diluted) 1,413,866 1,335,650 1,402,619 1,325,739
Sirius Satellite Radio Inc. and Subsidiaries
Consolidated Statements of Operations - continued
(In thousands)
(Unaudited)
For the Three Months For the Years
Ended December 31, Ended December 31,
2006 2005 2006 2005
(1) Amounts related to
stock-based compensation
included in other operating
expenses were as follows:
Satellite and
transmission $366 $487 $2,568 $1,942
Programming and content 24,635 4,676 321,774 19,469
Customer service and
billing 167 144 812 549
Sales and marketing 4,665 11,801 19,543 42,149
Subscriber acquisition
costs 1,150 18,594 31,898 49,709
General and administrative 10,981 5,978 49,928 27,724
Engineering, design
and development 661 4,516 11,395 21,536
Total stock-based
compensation $42,625 $46,196 $437,918 $163,078
Sirius Satellite Radio Inc. and Subsidiaries
Balance Sheet Data
(In thousands)
(Unaudited)
As of December 31,
2006 2005
Cash, cash equivalents and marketable
securities $408,921 $879,257
Restricted investments 77,850 107,615
Working capital (257,799) 404,481
Total assets 1,658,528 2,085,362
Long-term debt 1,068,249 1,084,437
Total liabilities 2,047,599 1,760,394
Accumulated deficit (3,833,720) (2,728,853)
Stockholders' (deficit) equity (389,071) 324,968
Sirius Satellite Radio Inc. and Subsidiaries
Statements of Cash Flows
(In thousands)
(Unaudited)
For the Three Months For the Years
Ended December 31, Ended December 31,
2006 2005 2006 2005
Cash flows from
operating activities:
Net loss $(245,597) $(311,389) $(1,104,867) $(862,997)
Adjustments to reconcile
net loss to net cash
provided by (used in)
operating activities:
Depreciation 27,495 24,915 105,749 98,555
Non-cash interest expense 775 804 3,107 3,169
Provision for doubtful
accounts 1,826 1,017 7,513 4,311
Non-cash equity in net
loss of affiliate - 6,199 4,445 6,938
Non-cash loss from
redemption of debt - - - 712
Loss on disposal of
assets 772 742 1,661 1,028
Impairment loss - - 10,917 -
Stock-based
compensation 42,625 46,196 437,918 163,078
Deferred income taxes 156 631 2,065 2,311
Changes in operating
assets and liabilities:
Marketable securities - - - 16
Accounts receivable (8,724) (18,985) (14) (28,440)
Inventory 10,477 (916) (20,246) (6,329)
Prepaid expenses and
other current assets (28,115) (14,516) (62,679) (29,129)
Other long-term assets 2,343 3,760 (19,331) 6,476
Accounts payable and
accrued expenses 102,299 108,721 33,519 145,052
Accrued interest 11,699 11,472 1,239 17,813
Deferred revenue 105,334 129,142 181,003 210,947
Other long-term
liabilities 11,503 17 3,452 (3,505)
Net cash provided by
(used in) operating
activities 34,868 (12,190) (414,549) (269,994)
Cash flows from
investing activities:
Additions to property
and equipment (5,459) (31,939) (99,827) (49,888)
Sales of property and
equipment 4 7 127 72
Purchases of restricted
and other
investments - (18,422) (12,339) (25,037)
Release of restricted
investments 1,000 - 26,000 10,997
Purchases of
available-for-sale
securities (5,000) (20,200) (123,500) (148,900)
Sales of
available-for-sale
securities 28,375 27,000 229,715 36,935
Net cash provided by
(used in)
investing activities 18,920 (43,554) 20,176 (175,821)
Cash flows from
financing activities:
Proceeds from issuance
of long-term debt, net - - - 493,005
Redemption of debt - - - (57,609)
Proceeds from exercise
of stock options 21,757 7,418 25,787 18,543
Other - - - (8)
Net cash provided by
financing activities 21,757 7,418 25,787 453,931
Net increase (decrease)
in cash and cash
equivalents 75,545 (48,326) (368,586) 8,116
Cash and cash equivalents
at the beginning of
period 317,876 810,333 762,007 753,891
Cash and cash equivalents
at the end of period $393,421 $762,007 $393,421 $762,007