equity research report siri

NYU-POLY Research Report This report is published for educational purposes only

by students competing in the

Equity Research report competition.

Important disclosures appear at the back of this report NYU-Poly Equity Research Report Competition

Ticker: SIRI Recommendation: BUY

Price: $1.1775 Price Target: $2.075

Earnings/Share

Mar. Jun. Sept. Dec. Year P/E Ratio

2008A $N/A $N/A $N/A $N/A $N/A N/Ax

2009A N/A N/A N/A N/A N/A N/A

2010E 0.116 0.155 0.206 0.309 0.786 1.78

2011E 0.374 0.439 0.527 0.75 2.09 2.39

Highlights

Valuation: We are initiating coverage of Sirius XM Radio with a buy rating and a twelve month

price target of $2.075.

Strengthened financial situation : Due to its strong cash position, strong first quarter subscriber

growth and the improving outlook for the economy, Sirius XM will redeem all of its outstanding

10% Senior PIK Secured Notes due 2011 a year ahead of schedule, which in turn will reduce

interest expense and increase free cash flow.

Growing client base: Sirius XM adds over 171,000 net subscribers in the first quarter of 2010,

ended with 18,944,199 subscribers, an increase of 344,765 over the year ago quarter. At the same

time, its average revenue per user increased by 2.0%-from $10.56 to $10.73. We believe that many

of the new client accounts that being added and increased average revenue per user have the

potential to be scaled up to approximately 1800 million dollars in annual revenue and will help

Sirius XM grow aggressively.

Improved competitive landscape: With more programs broadcasted such as „Doctor Radio

Reports: Understanding Autism' and free Sirius XM app added to Android-powered Smartphone,

the company is winning an edge to attract more customers.

Sirius XM Radio Inc.

May 2, 2010

Jiamian Yang

Email:jyang01@stude

nts.poly.edu

Industry: Radio Broadcasting

52 Week Price Range $0.3-$1.22

Average Daily Volume 160.97million

Beta 2.07

Dividend Yield (Estimated) N/A

Shares Outstanding 3.88 B

Market Capitalization 4.57 B

Institutional Holdings 2%

Insider Holdings 22%

Book Value per Share(04/30/2010) $0.01

Debt to Total Capital 89%

Return on Equity -1491%

Market Profile

NYU-Poly Equity Trading Club May 2nd

2010

2

Business Description

Sirius XM Radio, Inc. is the world‟s largest pure-play audio entertainment company. Incorporated on May 17, 1990, it has two

subsidiaries, XM Satellite Radio Holdings Inc. and Satellite CD Radio Inc. Although the National Association of Broadcasters (NAB) and

the Consumer Coalition for Competition in Satellite Radio contended that if merged, the company would be a monopoly, which result in

lessening competition and innovation substantially, the two companies still merged on February 19, 2007, bringing the combined company

a total of more than 18.5 million subscribers based on current subscriber numbers on the date of merging.

After merger, the new company spent more money to develop new products with only one company to develop products for. So far,

services have been broadened to broadcasting music, sports, news, talk, entertainment, traffic and weather channels in the United States

which were not even conceived of when satellite radio was launched. The proprietary satellite radio systems - the SIRIUS system and the

XM system are used to broadcast those channels. The SIRIUS system consists of four in-orbit satellites, over 125 terrestrial repeaters that

receive and retransmit signals, satellite uplink facilities and studios. The XM system consists of four in-orbit satellites, over 650 terrestrial

repeaters that receive and retransmit signals, satellite uplink facilities and studios. Subscribers can also receive certain of music and other

channels over the internet, including through an application on the Apple iPhone.

As of December 31, 2009, Sirius XM Radio, Inc. had 18,772,758 subscribers.

Business Segments

The company generates its revenue in four segments.

• Subscription fees and activation fees with most of customers subscribing on annual, semiannual, quarterly or monthly basis.

• Advertising on select non-music channels

• Direct sale of home units that offer satellite services to home and commercial audio systems and products that provide access to the

internet radio services in the home without the personal computer.

• Other ancillary services offered by the company include SIRIUS Backseat TV, Sirius Travel Link, Real-Time Traffic services and

real-time weather services.

Figure 1: Revenue Breakdown

Figure 2: Annual Revenue by Business Segment

NYU-Poly Equity Research Report Competition 3

From figure1 and 2, we can see that the subscription fees are the primary resource which account for more than 75% of total revenue. The

subscription fees are increasing for successive three year in accordance with total revenue while there are no substantial changes for other

resources of revenue.

Industry Overview

Key Industry Figures 2009

Industry Revenue 15,287.3M

Revenue Growth -17.9%

Industry Gross Product 5,562.4

Number of Establishments 6,412

Number of Enterprises 2,937

Employment 105,793

Figure 3: Industry Statistics

Major Player Market

Cap(Billion)

CC Media Holdings Inc.

The parent company of Clear Channel 0.55989

Sirius XM Radio Inc. 4.57

CBS Corporation 10.967

Other Companies 0.71829

Figure 4: Key Competitors in the Industry

The Radio broadcast industry is a small industry worth less than 17 million dollars. It is highly concentrated, with the biggest player, CBS

Corporation, accounting for 65.49% of the market. The key industry statistics is provided as following. Sirius currently has a market

capitalization of $4.50 billion which places the company in the mid cap ranges, falling short in market cap compared to CBS. As the leader

of market cap, CBS has the largest company size in the industry of $10.967 billion, placing the company in the large market cap market.

Sirius XM, CBS and CC Media all dwarf the other companies in the industry who together have a market cap of $718.29 million which

places them in the small market cap scale.

Major Competitors Despite the fact that Sirius XM becomes the only provider of radio services via satellite after a merger on February 2007, it still faces

competition from other program sources.


• Traditional Radio. Unlike satellite radio, traditional AM/FM radio has had a well established demand for its services and offers

free broadcasts paid for by commercial advertising rather than by a subscription fee. Some AM/FM radio stations have reduced

the number of commercials, expanded range of music played on the air to lure customers away from satellite radio.

• HD Radio. Many radio stations have begun broadcasting digital signals, which is similar to satellite signals. These stations do not

charge a subscription fee for their digital signals but do generally carry advertising. To the extent that traditional radio stations

adopt signal transmission technology, any competitive advantage that satellite radio enjoy over traditional one because of clearer

digital signal would be lessened. Approximately 15 automakers have committed to installing HD radio equipment as either a

factory standard or factory option.

• Internet Radio. Internet radio broadcasts have no geographic limitations and can provide listeners with radio programming. Major

media companies and online providers, including Clear Channel, CBS, Pandora, Lost.fm and slacker, make high fidelity digital

streams available through the internet for free or for little fee. In addition, there has been wide proliferation of mobile internet

enabled Smartphone, many of which have the capability of interfacing with vehicles. These Smartphone can play recorded or

cached content and access live internet radio via application or browsers. The past few years have seen a steady increase in the

audio quality of internet radio streams and in the amount of audio content available via the Web, resulting in a steady increase in

internet radio audience metrics. The improvements from higher bandwidths and wider programming selection are likely to

continue making internet radio an increasingly significant competitor in the near future.

• Portable Audio Devices. Portable audio devices are portable digital music player that allow users to download and purchase music

online like Apple iPod and Google Nexus. They are compatible with certain car stereos and home speaker systems. Certain

automakers have entered into arrangements with manufacturers of portable media players.

• Direct Broadcast Satellite and Cable Audio. Some companies provide audio services through either direct broadcast satellite or

cable audio systems. There services are targeted to fixed locations. The radio services provided is often included as part of a

package of digital services with video service. And customers generally do not pay additional charge for the audio service.

• Traffic News Services. Clear Channel and Tele Atlas deliver nationwide traffic and travel information to drivers.

Competitive Positioning (SWOT Analysis)

Strength

Extensive choices and customized programming: Sirius XM offers a dynamic programming lineup of more than 135 channels of

commercial-free music, sports, news, talk, entertainment, and traffic and weather on it platform. The “Best of SIRIUS” package offers to

XM subscribers the Howard Stern channels, Martha Stewart Living Radio, SIRIUS NFL Radio, SIRIUS NASCAR Radio, Playboy Radio

and play-by-play NFL games and college sports programming while the “Best of XM” package offers to SIRIUS subscribers Oprah Radio,

The Virus, XM Public Radio, MLB Home Plate, NHL Home Ice, The PGA, Tour Network, and select play-by-play of NBA and NHL

games and college sports programming. Listeners are also allowed to customize and enhance standard programming lineup. The competitor


ClearChannel Communications offers I love Radio, an application that offers all of ClearChannel's radio stations which includes news, live

talk radio, and music. But it doesn't provide customized service. Competitors Pandora and Slacker do track the listeners' preferences and

tailor the music based on the listeners' tastes. Nevertheless, they do not offer news, talk programs or live DJ's.

Deep penetration into automakers: Sirius XM have agreements with almost every major automaker — Acura/Honda, Aston Martin,

Audi, Automobile Lamborghini, Bentley, BMW, Chrysler, Dodge, Ferrari, Ford, General Motors, Honda, Hyundai, Infiniti/Nissan, Jaguar,

Jeep, Kia, Land Rover, Lincoln, Lexus, Toyota, Mazda, Mercedes-Benz, Mercury, MINI, Mitsubishi, Porsche, Rolls-Royce, Volvo and

Volkswagen — to offer satellite radios as factory or dealer-installed equipment in their vehicles. As of December 31, 2009, satellite radios

were available as a factory or dealer-installed option in substantially all vehicle models sold in the United States, which is definitely an

advantage over all its competitors.

Multi access to service: Sirius XM‟s service can be accessed by internet, radio and Smartphone while competitors like Pandora, lost.fm‟s

service can only be retrieved by either internet or Smartphone.

Weakness

Competitors like Pandora and lost.fm provide free service to their customers. People‟s iPhone can get Pandora for fee anywhere and do not

have to pay for the monthly charge. People also build up databases of music on their own computer. There is really little need for younger

generation to have a paid service to get music.

Another weakness Sirius XM radio has is that it is heavily dependent on its third-party partners. Partnership with automakers which

actually is a strength contributes to the major revenue of Sirius XM Radio. But it can also turn into poison sometimes. If any of these

partnerships were to fail, the company would find it difficult to survive.

Opportunity

Exploring new ways to distribute satellite radio to their customers is one way that set the company apart from competitors. Usually in the

broadcast industry this comes in the form of partnerships. For example, Sirius XM has partnered with Dish Network satellite TV, allowing

Dish subscribers to access Sirius XM‟ programming through their television set.

Another area of opportunity would be in the product line and programming offered by the company. Is there a product that allows them to

access satellite radio wherever they want to go? For example, Sirius XM released a “walkman” like satellite radio with a hefty price tag.

Lastly, what are people listening to? Sirius XM signed America‟s most controversial talk show host, Howard Stern. Because love him or

hate him, this is sure to be a strong seller for the company.

Another opportunity for Sirius XM lies in the pre-owned market which opens up an entirely new channel of customers. As of year-end

2009, there were approximately 27 million satellite radios installed in cars, with only 11.6 million that were active. Imagine how much

revenue could generate if Sirius XM can remarket to non-subscribers with the device already in their cars.

Threats

The company is facing the threat of losing subscriber base. It has a churn rate of 2.00% which is actually very high. Direct TV has a churn

rate of 1.5%, AT&T 1.4%. Sirius XM Radio‟s is higher than those companies which make them los a lot of subscriber base.

Nature may be the biggest threat. Having satellites in space is extremely costly Storms and disruptions in space threaten to shutdown the

company, and imply a huge maintenance cost when something is wrong? It is costly to insure problems in space?

Costly operation, expenses, and possible technological failure, threaten the company‟s outlook. Subscribers and consumers may be turned

off to this industry, meaning Sirius XM has to spend a great deal in advertising and marketing to emphasize the product as positive and

worthwhile. However, rapid technological advances could make satellite radio service incompetent anytime.

Financial Analysis Despite economic headwinds and a devastated auto industry, the company‟s 2009 financial results are impressive.

Earnings Analysis and Projection

Sirius XM is the only major U.S. radio company to grow revenues in the last year. The total revenue increased from $1663,992 to

$2472,638.The total revenue is composed of subscriber revenue, advertising revenue, equipment revenue and other revenue. we see an

increase of 48% in subscriber revenue due to merger effect and the sale of "best of programming", an increase of 10% in advertising

revenue due to inclusion of XM revenue from merger, decrease of 10% in equipment revenue due to decrease in sales through direct to

consumer distribution channel and low product royalties, increase of 599% in other revenue due to the introduction of the U.S Music

Royalty Fee and the inclusion of XM revenue for a full year.

Over the next few years, we project Sirius XM's revenue to grow driven by increasing subscriber number and improving economy.

Cash Flow Analysis


2009 2008 2007 2009vs. 2008 2008 vs. 2007

Net cash provided by operating

activities

433,830 (152,797) (148,766) 586,627 (4,031)

Net cash provided by investing

activities

(248,511) 728,425 (54,186) (976,936) 782,611

Net cash provided by financing

activities

(182,276) (634,002) 248,351 451,726 (882,353)

Net increase in cash and cash

equivalents

3,043 (58,374) 45,399 61,417 (103,773)

Cash and cash equivalents at

beginning of period

380,006 438,820 393,421 (58,374) 45,399

Cash and cash equivalents at end

of period

383,489 380,446 438,820 3,043 (58,374)

Figure 4: Cash Flow in $ thousands

Sirius XM achieved over $185 million in free cash flow for 2009, also the first year of free cash flow- a dramatic increase compared to a

negative free cash flow in 2008

Balance Sheet Analysis

Figure 5: Balance Sheet Data ( in $ thousands)

2009

Cash and cash equivalents 383,489

Restricted investments 3,400

Total assets 7,263,528

Long-term debt, net of current portion 3,062,693

Stockholders’ equity (37,432)

Figure 6: Debt Principal and Interest due

The debt load the company has right now is too heavy. As of December 31, 2009, the company had an aggregate principal amount of

approximately $3.1 billion of indebtedness on their balance sheets. That translates to $214 million interest expense for 2010 and $308

million for 2011. The company has rolled them to the future, but the interest cost is till there. And eventually the company has to deal with

that debt load.

Valuation

Discounted Cash flow Model Analysis: Using a three-stage FSEF model in which free cash flows grow at 21% for the first year, slow to

15% growth over a four-year period, and stabilize at 2.5% subsequently, we arrived a valuation of $2.47 using Damodaran's spreadsheet.

The cost of equity used in the model is derived from the capital asset pricing model with the key assumptions as follows:

-Risk-free rate: 3.65%

- Market Premium: 6%

- Beta: 1.95


Comparable Company Analysis: While Sirius has no competitors that directly replicate its business model, we find a combination of CBS

and CC Media as sufficient comparisons. CBS is currently at an EV-to-EBITDA multiple of 9.45, and CC Media share is at 13.63x.

Applying weights based on revenue mix, we arrive at an EBITDA multiple of 9.45. Based on our estimate of 2010 EBITDA of $690.4

million, we forecast price per share of $1.68 for the coming 12 months.

By blending the two target price with equal weight, we arrive at a price target of $ 2.075, which implies that the stock is undervalued at its

current level.

Investment Risks

Heavy debt

As of December 31, 2009, the company had an aggregate principal amount of approximately $3.1 billion of indebtedness. A substantial

portion of cash flows from operations is dedicated to the payment of principal and interest on its indebtedness which could adversely affect

its ability to raise additional capital to fund operations and could limit its ability to react to changes in the economy or industry.

Business too dependent on automakers

The sale of lease of vehicles with satellite radios is an important source of subscribers for Sirius service while subscription fee account for

more than 80% of its total revenue. So the subscription growth is dependent in large part on sales and vehicle production by automakers.

Unfortunately, a number of automakers have experienced a sharp decline in sales, have reduced production and are experiencing extreme

financial difficulties. If the vehicle sales continue to decline or the penetration of satellite radios in those vehicles reduce and there is no

offsetting growth in both of areas, subscriber growth for Sirius‟s satellite radio services will be adversely impacted.

Technology renovation

The audio entertainment industry is featured with frequent innovations, rapid change and evolving standards. Incapable of keep pace with

these changes will make the company less competitive in the market.

Failure of satellites

The company is currently operating eight satellites, four supporting the Sirius service and four supporting XM service. But the business

could be significantly damaged if the useful life of its satellites is shorter than expected, whether as a result of a satellite failure or technical

obsolescence and Sirius does not launch replacements in a timely manner.

.

Investment Thesis

Sirius XM is the only provider of radio services via satellite. It generates revenue from four businesses sectors: subscription fee, advertising,

equipment sales and other businesses. The total revenue increased from $1663,992 at the end of 2008 to $2472,638 at the end of 2009.

Delivering Sirius XM app for Smartphone and tapping pre-owned market further fuel the growth over a five-year period. However, heavy

dependence on its third-party partners to generates revenue increase its risk profile. If any of partnerships were to fail, the company would

be in difficult situation.

Despite economic headwinds and a devastated auto industry in past two years, Sirius XM has managed the auto industry crisis, which

threatened its ability to gain new subscribers and overcame a mountain of debt through refinancing and a deal with cable pioneer John

Malone that gave his Liberty Media a 40% percent equity stake.

Balance sheet metrics is also improving. The new addition of 171,000 subscribers for the first quarter of 2010, benefiting from better car

sales and users signing after free trial left the Company in much greater financial health. Cash levels have increased from negative at the

end of 2008 to $3,043 million at the end of 2009. All these shook off the threat of a Nasdaq delisting. Finally, $113,685 million of 10%

Senior PIK Secured Notes due 2011 will be redeemed ahead of schedule on June 1, which will decrease a large portion of financing costs

for the company.

Despite these positive fundamentals, Sirius is currently trading at a discount which is supported by our comparable company analysis and

our DCF model. Both point to a higher valuation than the current market price. The current price to sales per share ratio of 1.88x is also

well below its normal historic range from 86.42x to 12.24x, which justify a premium valuation for it.

Based on our above analysis, we believe that the stock is undervalued and has room on the upside. We have a 12 month target price of

$2.075. We recommend a BUY.


Figure 1: Income Statement $ in millions Source: Company Documents, Student Estimates

SIRIUS XM RADIO INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS

For the Years Ended December 31,

(in thousands, except per share

data) 2009 2008 2007

Revenue:

Subscriber revenue, including

effects of rebates 2,287,503 1,548,919 854,933

Advertising revenue, net of agency

fees 51,754 47,190 34,192

Equipment revenue 50,352 56,001 29,281

Other revenue 83,029 11,882 3,660

Total revenue 2,472,638 1,663,992 922,066

Operating expenses (depreciation and amortization shown separately below) (1):

Cost of services:

Satellite and transmission 84,033 59,279 27,907

Programming and content 308,121 312,189 236,059

Revenue share and royalties 397,210 280,852 146,715

Customer service and billing 234,456 165,036 93,817

Cost of equipment 40,188 46,091 35,817

Sales and marketing 228,956 231,937 183,213

Subscriber acquisition costs 340,506 371,343 407,642

General and administrative 227,554 213,142 155,863

Engineering, design and

development 41,031 40,496 41,343

Impairment of goodwill _ 4,776,190 _

Depreciation and amortization 309,450 203,752 106,780

Restructuring, impairments and

related costs 32,807 10,434 _

Total operating expenses 2,244,312 6,700,741 1,435,156

Income (loss) from operations 228,326 (5036,749) (513,090)

Other income (expense):

Interest and investment income 3,645 9,079 20,570

Interest expense, net of amounts

capitalized (306,420) (144,833) (70,328)

Loss on extinguishment of debt and

credit facilities, net (267,646) (98,203) _

Gain (loss) on investments 1,931 (30,507) _

Other income (expense) 3,355 (9,599) 31

Total other expense (565,135) (274,063) (49,727)

Loss before income taxes (336,809) (5,310,812) (562,817)

Income tax expense (5,981) (2,476) (2,435)


Net loss (342,790) (5,313,288) (565,252)

Preferred stock beneficial

conversion feature (186,188) _ _

Net loss attributable to common

stockholders (528,978) (5,313,288) (565,252)

Net loss per common share (basic

and diluted) (0.15) (2.45) (0.39)

Weighted average common shares

outstanding (basic and diluted) 3,585,864 2,169,489 1,462,967

(1) Amounts related to share-based payment expense included in operating expenses were as follows:

Satellite and transmission 2,745 4,236 2,198

Programming and content 9,064 12,148 9,643

Customer service and billing 2,051 1,920 708

Sales and marketing 9,608 13,541 15,607

Subscriber acquisition costs _ 14 2,843

General and administrative 45,634 49,354 44,317

Engineering, design and

development 4,879 6,192 3,584

Total share-based payment expense 73,981 87,405 78,900


Figure 2: Balance Sheet $ in millions Source: Company Documents, Student Estimates

SIRIUS XM RADIO INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

As of December 31,

(in thousands, except share and per share data) 2009 2008 2007

ASSETS

Current assets:

Cash and cash equivalents 383,489 380,446 438,820

Accounts receivable, net 113,580 102,024 44,068

Receivables from distributors 48,738 45,950 60,004

Inventory, net 16,193 24,462 29,537

Prepaid expenses 100,273 67,203 31,392

Related party current assets 106,247 110,427 2,161

Deferred tax asset 72,640 31,270 35,000

Other current assets 18,620 27,474 37,875

Total current assets 859,780 789,256 678,857

Property and equipment, net 1,711,003 1,703,476 806,263

FCC licenses 2,083,654 2083,654 83,654

Restricted investments 3,400 141,250 18,000

Deferred financing fees, net 8,902 9,197 13,864

Intangible assets, net 611,461 688,671 -

Goodwill 1,834,856 1,834,856 -

Related party long-term assets 110,594 128,357 3,237

Other long-term assets 39,878 81,019 90,274

Total assets 7,263,528 7,459,736 1,694,149

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable and accrued expenses 543，686 625,264 464,943

Accrued interest 74,566 76,463 24,772

Current portion of deferred revenue 1,086,205 1,002,736 548,330

Current portion of deferred credit on executory

contracts

252,831 234,774 -

Current maturities of long-term debt 13,882 399,726 33,801


Accumulated deficit (10,241,238) (9,712,260) (4,398,972)

Total stockholders’ equity 37,432 8,537 (792,737)

Total liabilities and stockholders’ equity 7,263,528 7,459,736 1,694,149

Related party current liabilities 105,471 68,373 1,148

Total current liabilities 2,076,641 2,407,336 1,074,994

Deferred revenue 283,942 247,889 110,525

Deferred credit on executory contracts 784,078 1,037,190 _

Long-term debt 2,799,127 2,820,781 1,278,617

Long-term related party debt 263,566 _ _

Deferred tax liability 940,182 894,453 12,771

Related party long-term liabilities 17,508 _ _

Other long-term liabilities 61,052 43,550 9,979

Total liabilities 7,226,096 7,451,199 2,486,886

Commitments and contingencies (Note 15)

Stockholders’ equity:

Preferred stock, par value $0.001; 50,000,000

authorized at December 31, 2009 and 2008

Series A convertible preferred stock

(liquidation preference of $51,370 at

December 31, 2009 and 2008); 24,808,959

shares issued and outstanding at December 31,

2009 and 2008

25 25 _

Convertible perpetual preferred stock, series B

(liquidation preference of $13 and $0

at December 31, 2009 and 2008, respectively);

12,500,000 and zero shares issued

13 _

Convertible preferred stock, series C junior; no

shares issued and outstanding at December 31,

2009 and 2008

_ _

Common stock, par value $0.001;

9,000,000,000 and 8,000,000,000 shares

authorized

at December 31, 2009 and 2008, respectively;

3,882,659,087 and 3,651,765,837

3882 3652 1,471

Accumulated other comprehensive loss, net of

tax

(6581) (7871) _

Additional paid-in capital 10,281,331 9,724,991 3,604,764


Figure 2: Statement of Cash Flows $ in millions Source: Company Documents, Student Estimates

SIRIUS XM RADIO INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Years Ended December 31,

(in thousands) 2009 2008 2007

Cash flows from operating

activities: $ (342,790) $ (5,313,288) $ (565,252 )

Net loss Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Depreciation and amortization 309,450 203,752 106,780

Impairment of goodwill _ 4,766,190 _

Non-cash interest expense, net of

amortization of premium 33,818 (6,311) 4,269

Provision for doubtful accounts

30,602 30,602 21,589 9,002

Amortization of deferred income

related to equity method investment (2,776) (1,156) _

Loss on extinguishment of debt and

credit facilities, net 267,646 98,203 _

Restructuring, impairments and

related costs 26,964 _ _

Loss (gain) on disposal of assets _ 4,879 (428)

Loss on investments 13,664 28,999 _

Share-based payment expense 73,981 87,405 78,900

Deferred income taxes 5,981 2,476 2,435

Other non-cash purchase price

adjustments (202,054) (68,330) _

Other Changes in operating assets

and liabilities: _ 1,643 _

Accounts receivable (42,158) (32,121) (28,881)

Inventory 8,269 8,291 4,965

Receivables from distributors (2,788) 14,401 (13,179)

Related party assets 15,305 (22,249) (1,241)

Prepaid expenses and other current

assets 10,027 (19,953) 11,118

Other long-term assets 86,674 (5,590) 13,691

Accounts payable and accrued expense (46,645) (83,037) 52,492

Accrued interest 2,429 23,081 (8,920)

Deferred revenue 89,144 73,334 183,582

Related party liabilities 54,606 34,646 _

Other long-term liabilities 44,481 30,249 1,901

Net cash provided by (used in)

operating activities 433,830 (152,797) (148,766)

Cash flows from investing activities:

Additions to property and equipment (248,511) (130,551) (65,264)

Sales of property and equipment _ 105 641

Purchases of restricted and other

investments _ (3000) (310)


Acquisition of acquired entity cash _ 819,521 _

Merger related costs _ (23,519) (29,444)

Net cash (used in) provided by

investing activities (248,511) 728,425 (54,186)

Cash flows from financing activities:

Proceeds from exercise of warrants and

stock options _ 471 4,097

Preferred stock issuance costs, net of

costs (3,712) _ _

Long-term borrowings, net of costs 582,612 531,743 244,879

Related party long-term borrowings, net

of costs 362,593 _ _

Payment of premiums on redemption of

debt (17,075) (18,693) _

Payments to noncontrolling interest _ (61,880) _

Repayment of long-term borrowings (755,447) (1,085,643) (625)

Repayment of related party long-term

borrowings (351,247) _ _

Net cash (used in) provided by

financing activities (182,276) (634,002) 248,351

Net increase (decrease) in cash and cash

equivalents 3,043 (58,374) 45,399

Cash and cash equivalents at beginning

of period 380,446 438,820 393,421

Cash and cash equivalents at end of

period 383,489 380,446 438,820


Disclosures:

Ownership and material conflicts of interest:

The author(s), or a member of their household, of this report holds a financial interest in the securities of this company.

The author(s), or a member of their household, of this report knows of the existence of any conflicts of interest that might bias the content or publication of

this report. The conflict of interest is…

Receipt of compensation:

Compensation of the author(s) of this report is not based on investment banking revenue.

Position as a officer or director:

The author(s), or a member of their household, does serves as an officer, director or advisory board member of the subject company.

Market making:

The author(s) does not act as a market maker in the subject company‟s securities.

Ratings key:

Banks rate companies as either a BUY, HOLD or SELL. A BUY rating is given when the security is expected to deliver absolute returns of 15% or greater

over the next twelve month period, and recommends that investors take a position above the security‟s weight in the S&P 500, or any other relevant index. A SELL rating is given when the security is expected to deliver negative returns over the next twelve months, while a HOLD rating implies flat returns over

the next twelve months.

Disclaimer:

The information set forth herein has been obtained or derived from sources generally available to the public and believed by the author(s) to be reliable, but

the author(s) does not make any representation or warranty, express or implied, as to its accuracy or completeness. The information is not intended to be

used as the basis of any investment decisions by any person or entity. This information does not constitute investment advice, nor is it an offer or a solicitation of an offer to buy or sell any security. This report should not be considered to be a recommendation by any individual affiliated with NYU-Poly

or the NYU-Poly Equity Research Report Competition with regard to this company‟s stock.

equity research report siri

Documents

xm satellite radio holdings

xm system

sirius system

satellite cd radio

free sirius xm app

new company

doctor radio reports

combined company