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Old 11-01-2005, 07:40 AM   #1
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SIRIUS SATELLITE RADIO REPORTS RECORD REVENUE FOR THIRD QUARTER 2005

- Revenue Up 250% Over Prior Year Third Quarter as Net Subscriber
Additions Double
- Exclusive Relationships with DaimlerChrysler and BMW Extended
- Subscriber Guidance Raised to "Over" 3 Million by Year-End
- Company Continues to Gain Market Share

NEW YORK - November 1, 2005 - SIRIUS Satellite Radio (NASDAQ: SIRI)
today announced strong third quarter financial and operating results,
driven by subscriber growth in its retail and automotive OEM distribution
channels, and continued demand for its superior programming.

As of September 30, 2005, SIRIUS had 2,173,920 subscribers. The third
quarter subscriber figure reflects net additions of 359,294 subscribers,
a 97% increase over the year-ago figure of 181,948 net subscriber
additions.

The company raised its year-end 2005 subscriber guidance to over 3
million, and reaffirmed its previous guidance on all other key metrics.

SIRIUS expects its subscriber growth will be driven by traditionally
strong consumer demand in the fourth quarter, and by SIRIUS' exclusive
programming as well as the continued appeal of its commercial-free music.

"The third quarter represented another quarter of solid execution by
our management team," said Mel Karmazin, CEO of SIRIUS. "We continued to
gain retail and overall market share in the quarter, while meeting our
guidance for third quarter net subscriber additions. As we move into
the important fourth quarter, we believe that our mix of innovative and
competitively-priced products at retail, combined with more SIRIUS
factory installations by our automotive partners, will yield strong
year-end results, and we are raising our subscriber guidance to over 3 million
to reflect this expectation. The introduction of Martha Stewart Living
Radio and the anticipation of Howard Stern's arrival in January 2006
should also generate unprecedented excitement for our service."

SIRIUS reported revenue of $66.8 million for the third quarter of 2005,
a 250% increase over the $19.1 million reported for the year-ago
quarter. Average monthly churn for the third quarter and year to date was
1.8% and 1.5%, respectively. Average monthly churn is expected to be
approximately 1.5% for the full year.

The company reported subscriber acquisition costs (SAC) per gross
subscriber addition of $149 for the third quarter of 2005, a 35% improvement
over SAC per gross subscriber addition of $229 in the year-ago quarter.
SIRIUS continues to project SAC per gross subscriber addition of under
$145 for the year.

During the third quarter of 2005, SIRIUS added 209,920 net subscribers
from its retail channel, a 56% increase over 134,442 retail net
subscriber additions in the year-ago quarter. The company also added 149,000
net subscribers from its automotive OEM channel, a 230% increase over
45,196 net subscriber additions from that channel in the third quarter
of 2004.

SIRIUS reported a net loss of ($180.4) million, or ($0.14) per share,
for the third quarter of 2005 compared with a net loss of ($169.4)
million, or ($0.14) per share, for the third quarter of 2004.

(Continued in next post)
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Old 11-01-2005, 08:31 AM   #2
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(Continued from Sirius_Rich's post above...)

Automotive OEM Update

SIRIUS recently extended each of its exclusive automotive OEM
relationships. On October 31, 2005, SIRIUS announced the extension of its
exclusive agreement with DaimlerChrysler to September 1, 2012. The
agreement includes all Chrysler Group and Mercedes-Benz vehicles as well as
Freightliner trucks. Over 750,000 new subscribers are expected to be
generated from the Chrysler Group alone for the 2006 model year, with
volumes estimated to increase significantly in the future. In September
2005, SIRIUS and BMW of North America announced an agreement that extends
SIRIUS' exclusive relationship with BMW through August 2008. All BMW
models are covered by the agreement. During the second quarter of 2005,
SIRIUS extended its exclusive relationship with the Ford Motor Company
through September 2011. All Ford Motor Company brands in the U.S. are
covered by the agreement.

Product Update

SIRIUS will have a number of next generation products available at
retail during the fourth quarter including the SIRIUS S50, the company's
first wearable product; the sleek Starmate Replay, designed for easy
vehicle installation; SIRIUS One and the XACT Visor, two new slim-line
products that have multiple installation options including dash, console or
visor mounting; and a SiriusConnect product that is backwards
compatible with many Sony UniLink(TM) headunits. In the fourth quarter, SIRIUS
will also offer a SiriusConnect unit that will make it easy for owners
of General Motors vehicles to install SIRIUS. The company is also
introducing the Alpine SiriusConnect SIR-ALP10T, its first tuner to
incorporate both audio entertainment and traffic data services.

Programming Update

SIRIUS continues to add innovative programming. In August, SIRIUS
launched its second season of NFL play-by-play coverage as The Official
Satellite Radio Partner of the NFL. On September 29, 2005, SIRIUS launched
a new programming lineup, including the addition of five compelling new
music channels, and channels for Martha Stewart Living Radio and Howard
Stern. Preparations are well underway for Howard Stern's arrival at
SIRIUS in January 2006. In its continuing effort to expand programming
for women, SIRIUS announced that it will launch a full time channel with
Cosmopolitan, the best-selling young women's magazine in the world,
early next year. Demonstrating the flexibility derived from its
significant bandwidth, SIRIUS dedicates entire 24-hour, commercial-free music
channels to some of the world's greatest artists. In addition to "Radio
Elvis," its all-Elvis Presley radio channel broadcast live from
Graceland in Memphis, SIRIUS launched "Rolling Stones Radio" and recently
announced "E Street Radio," the world's first 24-hour channel featuring
the music of Bruce Springsteen and the E Street Band.

Offering of $500 million of 9 5/8% Senior Notes and Redemption of 15%
and 14 1/2% Notes

During the third quarter of 2005, SIRIUS completed an offering of $500
million in aggregate principal amount of 9 5/8% Senior Notes due 2013.
SIRIUS used approximately $63.1 million of the proceeds of this
offering to redeem all of its outstanding 15% Senior Secured Discount Notes
due 2007 and 14 1/2% Senior Secured Notes due 2009, and will use the
balance of the net proceeds for general corporate purposes.

Guidance for 2005

The company raised its year-end subscriber guidance and reaffirmed its
previous guidance on all other key guidance metrics for the full year
2005. After adding over one million new subscribers in the first nine
months of the year, SIRIUS expects continued strong subscriber growth in
the traditionally busy fourth quarter and raised its previous year-end
2005 target to over 3 million subscribers.

Average monthly churn is expected to be approximately 1.5% for full
year 2005, in line with previous guidance, given continued high levels of
customer satisfaction. The company continues to expect SAC per gross
subscriber addition to be under $145 for the full-year 2005, with
further declines expected in 2006.

SIRIUS expects to generate $230 million of total revenue and an
adjusted loss from operations of approximately ($540) million in 2005. Total
operating cash uses, capital expenditures and restricted investment
activity are expected to be approximately ($375) million in 2005.

SIRIUS ended the third quarter of 2005 with approximately $934 million
in cash, cash equivalents and marketable securities. SIRIUS' first
quarter of positive free cash flow could be reached as early as the fourth
quarter of 2006, and the company continues to expect to generate
positive free cash flow for the full-year 2007.

Conference Call Information:

SIRIUS will hold a conference call today at 8 am ET to discuss
operating and financial results. The public, members of the investment
community and the press will have live access to the conference call via the
company's website, www.sirius.com, and on the SIRIUS service by tuning
to SIRIUS Channel 127. A replay of the call will also be available on
the SIRIUS website.

THIRD QUARTER 2005 VERSUS THIRD QUARTER 2004

For the third quarter of 2005, SIRIUS recognized total revenue of $66.8
million compared with $19.1 million for the third quarter of 2004.
This increase in revenue was driven by a net increase of 1,511,631
subscribers from September 30, 2004 to September 30, 2005.

The company's adjusted loss from operations decreased by $20.3 million
to ($105.4) million for the third quarter of 2005 from ($125.7) million
for the third quarter of 2004 (refer to the reconciliation table of
GAAP loss from operations to adjusted loss from operations). This
decrease was driven by a 257%, or $46.2 million, increase in subscriber
revenue as a result of a 228% increase in the company's subscriber base,
offset by an increase of 46%, or $21.6 million, in subscriber acquisition
costs. Such increase in subscriber acquisition costs reflected higher
shipments of SIRIUS radios and chip sets and increased commissions to
support a 125% increase in gross subscriber additions from 207,181 for
the third quarter of 2004 to 465,228 for the third quarter of 2005. This
increase was offset by reductions in average subsidy rates as the
company continued to reduce manufacturing and chip set costs.

Programming and content expenses increased by $4.8 million to $23.5
million for the third quarter of 2005 from $18.7 million for the third
quarter of 2004. The increase was primarily attributable to an increase
in license fees associated with new content agreements; compensation
related costs for additions to headcount; additional on-air talent costs
due to the expansion of the programming lineup; and broadcast royalties
as a result of the increase in the company's subscriber base.

During the third quarter of 2005, the company also had increases in
customer service and billing expenses and general and administrative
expenses. Customer service and billing expenses increased by $4.1 million
to $9.4 million for the third quarter of 2005 from $5.3 million for the
third quarter of 2004. The increase was primarily attributable to call
center operating costs necessary to accommodate the increase in the
subscriber base. Customer service and billing expenses per average
subscriber per month declined 50% to $1.59 for the third quarter of 2005 from
$3.16 for the third quarter of 2004. General and administrative
expenses increased by $2.2 million to $14.0 million for the third quarter of
2005 from $11.8 million for the third quarter of 2004. The increase
was primarily attributable to additional personnel-related costs offset
by a decrease in consulting fees.

Such increases in operating expenses were offset by a decrease in sales
and marketing expenses of $4.4 million to $38.2 million for the third
quarter of 2005 from $42.6 million for the third quarter of 2004. The
decrease was primarily a result of the expiration of certain
sponsorships and higher costs incurred in 2004 relating to the company's NFL
marketing campaign.

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 14
1/2% Senior Secured Notes due 2009.

SIRIUS reported a net loss of ($180.4) million, or ($0.14) per share,
for the third quarter of 2005 compared with a net loss of ($169.4)
million, or ($0.14) per share, for the third quarter of 2004.

NINE MONTHS ENDED SEPTEMBER 30, 2005 VERSUS NINE MONTHS ENDED SEPTEMBER
30, 2004

For the nine months ended September 30, 2005, SIRIUS recognized total
revenue of $162.2 million compared with $41.6 million for the nine
months ended September 30, 2004. This increase in revenue was driven by a
net increase of 1,511,631 subscribers from September 30, 2004 to
September 30, 2005.

The company's adjusted loss from operations increased by $40.2 million
to ($341.2) million for the nine months ended September 30, 2005 from
($301.0) million for the nine months ended September 30, 2004 (refer to
the reconciliation table of GAAP loss from operations to adjusted loss
from operations). This increase was driven by an 88%, or $95.7
million, increase in subscriber acquisition costs reflecting higher shipments
of SIRIUS radios and chip sets and increased commissions to support a
169% increase in gross subscriber additions to 1,252,623 for the nine
months ended September 30, 2005 from 465,077 for the nine months ended
September 30, 2004, offset by reductions in hardware subsidy rates as the
company continued to reduce manufacturing and chip set costs. The
effect of an increase in subscriber acquisition costs was more than offset
by a 288%, or $115.6 million, increase in subscriber revenue as a
result of a 228% increase in the company's subscriber base.

Programming and content expenses increased by $26.0 million to $63.6
million for the nine months ended September 30, 2005 from $37.6 million
for the nine months ended September 30, 2004. The increase was
primarily attributable to an increase in license fees associated with sports
related programming; compensation related costs for additions to
headcount; additional on-air talent costs due to the expansion of the
programming lineup; and broadcast royalties as a result of the increase in the
company's subscriber base.

Customer service and billing expenses increased by $12.9 million to
$26.6 million for the nine months ended September 30, 2005 from $13.7
million for the nine months ended September 30, 2004. The increase was
primarily attributable to call center operating costs necessary to
accommodate the increase in the subscriber base. Customer care and billing
expenses per average subscriber per month declined 49% to $1.81 for the
nine months ended September 30, 2005 from $3.57 for the nine months ended
September 30, 2004. General and administrative expenses increased
$11.9 million to $42.9 million for the nine months ended September 30, 2005
from $31.0 million for the nine months ended September 30, 2004
primarily as a result of overhead expansion to support the growth of the
business. In addition, engineering, design and development expenses
increased $11.1 million to $33.2 million for the nine months ended September
30, 2005 from $22.1 million for the nine months ended September 30,
2004 primarily as a result of additional personnel-related costs to
support research and development efforts; costs associated with tooling
and manufacturing upgrades at DaimlerChrysler and Ford to support factory
installations of SIRIUS radios; and development costs for the company's
next generation of radios, offset by decreases in chip set development
costs.

Such increases in operating expenses were offset by a decrease in
satellite and transmission expenses of $3.5 million to $20.7 million for the
nine months ended September 30, 2005 from $24.2 million for the nine
months ended September 30, 2004. Such decrease was primarily a result of
the company's decision not to renew its satellite insurance policy in
August 2004, offset in part by an increase in personnel-related costs.

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 14
1/2% Senior Secured Notes due 2009.

SIRIUS reported a net loss of ($551.6) million, or ($0.42) per share,
for the nine months ended September 30, 2005 compared with a net loss of
($450.3) million, or ($0.37) per share, for the nine months ended
September 30, 2004.

(Selected financial information follows).

SIRIUS defines adjusted loss from operations as GAAP loss from
operations before depreciation and equity granted to third parties and
employees. SIRIUS believes adjusted loss from operations is useful because it
represents operating expenses of the company excluding the effects of
non-cash items.

SIRIUS defines average monthly revenue per subscriber, or ARPU, as the
total earned subscriber revenue and net advertising revenue divided by
the daily weighted average number of subscribers for the period.

SIRIUS defines subscriber acquisition costs, or SAC, per gross
subscriber addition as SAC and negative margins from the direct sale of SIRIUS
radios and accessories divided by the number of gross subscriber
additions for the period.

Adjusted loss from operations, ARPU and SAC per gross subscriber
addition are not measures of financial performance under U.S. generally
accepted accounting principles and are used as measures of operating
performance. As a result, these metrics 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 or as a
substitute for measures of financial performance prepared in accordance with
U.S. generally accepted accounting principles.
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Old 11-01-2005, 03:28 PM   #3
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The company hinted on the conference call that it had a big meeting ahead with a Detroit partner. This helped fuel anticipation that another extended and exclusive contract -- most likely with Ford -- was in the works. Sirius' original agreement with Ford called for 1 million cars with factory-installed radios to hit the lots in the 2006 and 2007 model years.
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Old 11-01-2005, 06:19 PM   #4
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I think Ford is correct. The meetings could be about anything, but I bet it is good news when we find out.
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Old 11-01-2005, 11:45 PM   #5
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From the press release above...

Quote:
During the second quarter of 2005,
SIRIUS extended its exclusive relationship with the Ford Motor Company
through September 2011. All Ford Motor Company brands in the U.S. are
covered by the agreement.
If there is a future announcement regarding Ford pending, wouldn't it be great if it was that Sirius will be available on all Ford-branded vehicles (Ford, Lincoln, Mercury, Jaguar, Mazda, Volvo, etc.)? Now that would be something....
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