SIRIUS XM Radio Reports First Quarter 2009 Results

Pro Forma Revenue of $605.5 Million, Up 5% Year Over Year

Company Achieves $108.8 Million in Pro Forma Adjusted Income From

Operations - An Improvement of $179 Million Year Over Year

Cash Operating Costs Decrease 23% Year Over Year

Company Raises 2009 Adjusted Income From Operations Guidance

NEW YORK, May 7 -- SIRIUS XM Radio today announced first quarter 2009 financial and operating results, including $605.5 million in pro forma revenue, up 5% over first quarter 2008 pro forma revenue of $578.8 million; and $108.8 million in first quarter pro forma adjusted income from operations, as compared with first quarter 2008 pro forma adjusted loss from operations of ($70.2) million.

"Satellite radio is now a cash flow growth story," said Mel Karmazin, CEO of SIRIUS XM. "First quarter 2009 adjusted income from operations of $108.8 million is our second consecutive quarter of positive adjusted income from operations and represents an improvement of $179 million over last year's first quarter pro forma loss from operations of ($70.2) million. With a 5% increase in pro forma revenue and a 23% decrease in cash operating costs, these results demonstrate our focus on improving profitability despite slower automobile sales and a 2% sequential decline in satellite radio subscribers. The growth in adjusted income from $31.8 million in the fourth quarter of 2008 to $108.8 million in the first quarter of 2009 should give investors comfort that we are well positioned to exceed $350 million in adjusted income from operations this year, an increase from our prior guidance to exceed $300 million."

First quarter 2009 pro forma revenue was $605.5 million, up 5% from first quarter 2008 pro forma revenue of $578.8 million. Subscriber acquisition cost (SAC) per gross subscriber addition was $61 in the first quarter of 2009, an improvement of 26% over the $82 in pro forma SAC per gross subscriber addition in the first quarter of 2008.

SIRIUS XM ended first quarter 2009 with 18,599,434 subscribers, up 3% from 17,974,531 pro forma subscribers at the end of first quarter 2008 and down 2% from fourth quarter 2008 subscribers of 19,003,856. In the first quarter 2009, pro forma average revenue per subscriber (ARPU) was $10.43, as compared to pro forma ARPU of $10.48 in the first quarter 2008. The pro forma self-pay monthly customer churn was 2.2% in the first quarter 2009, as compared with self-pay monthly customer churn of 2.1% for SIRIUS and 1.8% for XM in the first quarter 2008.

In the first quarter 2009, SIRIUS XM achieved positive pro forma adjusted income from operations of $108.8 million as compared to a pro forma adjusted loss from operations of ($70.2) million in the first quarter 2008.

The first quarter 2009 pro forma net loss improved 73% to ($62.9) million as compared to a first quarter 2008 pro forma net loss of ($233.4) million. Pro forma free cash flow in the first quarter 2009 improved 99% to ($3.6) million as compared to a first quarter 2008 pro forma free cash flow loss of ($311.1) million.

On a GAAP basis, first quarter 2009 revenue was $586.9 million, the first quarter 2009 net loss was ($50.4) million, or ($0.01) per share, and the first quarter 2009 net loss attributable to common stockholders was ($236.6) million, or ($0.07) per share. In the first quarter 2008, the GAAP net loss was ($104.1) million, or ($0.07) per share.

2009 OUTLOOK

SIRIUS XM now expects to achieve over $350 million in 2009 adjusted income. This is an increase from the company's previous guidance of over $300 million in 2009 adjusted income provided on March 10, 2009.

PRO FORMA RESULTS OF OPERATIONS

The discussion of operating results below is based upon pro forma comparisons as if the merger of SIRIUS and XM occurred on January 1, 2007 and excludes the effects of stock-based compensation and purchase accounting adjustments.

FIRST QUARTER 2009 VERSUS FIRST QUARTER 2008

For the first quarter of 2009, we recognized total pro forma revenue of $605.5 million compared to $578.8 million for the first quarter of 2008. This 5%, or $26.7 million, revenue growth was driven by a 6% growth in average subscribers.

ARPU was $10.43 and $10.48 for the three months ended March 31, 2009 and 2008, respectively. The decrease was driven by a decrease in net advertising revenue per average subscriber, offset by an increase due to the sale of "Best of" programming.

Adjusted income (loss) from operations was $108,841 and ($70,154) for the three months ended March 31, 2009 and 2008, respectively (refer to the reconciliation table of net loss to adjusted income (loss) from operations). Adjusted income (loss) from operations was favorably impacted by the $26,676 increase in revenues and the $152,319 decrease in expenses included in adjusted income (loss) from operations.

Satellite and transmission costs decreased 23%, or $5,990, in the three months ended March 31, 2009 compared to the same period in 2008 due to reductions in maintenance costs, repeater lease expense, and personnel costs.

Programming and content costs decreased 10%, or $11,244, in the three months ended March 31, 2009 compared to the same period in 2008, mainly due to reductions in personnel and on-air talent costs as well as savings on various content agreements.

Revenue share and royalties increased by 9%, or $10,119, while maintaining relatively flat as a percentage of revenue in the three months ended March 31, 2009 compared to the same period in 2008.

Customer service and billing costs decreased by $805 in the three months ended March 31, 2009 compared to the same period in 2008, due to scale efficiencies over a larger subscriber base.

Cost of equipment decreased by 50%, or $8,146, in the three months ended March 31, 2009 compared to the same period in 2008 as a result of a decrease in our direct to customer sales and lower inventory write-downs.

Sales and marketing costs decreased 35%, or $28,072, and decreased as a percentage of revenue from 14% to 8% in the three months ended March 31, 2009 compared to the same period in 2008. The decrease in Sales and Marketing costs was due to reduced advertising and cooperative marketing spend as well as reductions to personnel costs and third party distribution support expenses.

Subscriber acquisition costs decreased 48%, or $77,624, and decreased as a percentage of revenue from 28% to 14% in the three months ended March 31, 2009 compared to the same period in 2008. This improvement was primarily driven by a 26% improvement in SAC, as adjusted, per gross addition due to fewer OEM installations relative to gross subscriber additions, improved OEM subsidies and higher one time aftermarket inventory reserves in the first quarter of 2008 compared to the first quarter of 2009. Subscriber acquisition costs also decreased as a result of the 34% decline in gross additions during the three months ended March 31, 2009.

General and administrative costs decreased 32%, or $22,903, mainly due to the absence of onetime charges related to certain legal and regulatory matters incurred in 2008 and lower personnel costs.

Engineering, design and development costs decreased 48%, or $7,654, in the three months ended March 31, 2009 compared to the same period in 2008, due to lower costs associated with manufacturing of radios, OEM tooling and manufacturing, and personnel.

Other expenses increased 93%, or $46,802, in the three months ended March 31, 2009 compared to the same period in 2008 driven mainly by an increase in interest expense of $25,390 and loss from redemption of debt of $17,957. Interest expense increased due primarily to XM's issuance of the 13% Senior Notes due 2013 and the 7% Exchangeable Senior Subordinated Notes due 2014 in the third quarter of 2008.