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XM Reports Higher Net Subs

2/26/2007 10:17:00 AM Eastern

Washington — XM Satellite Radio reported its first results since its announcement to have a “merger of equals” with rival Sirius Satellite Radio, saying that it has added nearly 1.7 million net subscribers and increased its revenue by 67 percent to $933 million for its fiscal year, ended Dec. 31, 2006.

XM reports that it now has a total of 7.6 million subscribers, and achieved positive cash flow from operations in the fourth quarter. For the fourth quarter of 2006, XM reported quarterly total revenue of $257.1 million, an increase of 45 percent over the $177.1 million total revenue reported in fourth quarter of 2005. XM's full-year 2006 total revenue was $933.4 million, an increase of 67 percent over the $558.3 million total revenue recorded in 2005. Subscription revenue grew 64 percent to $825.6 million, from $502.6 million in 2005. Advertising revenue grew 76 percent to $35.3 million, from $20.1 million.

XM said the quarterly and annual increases in revenue were driven by subscriber growth and increases in average revenue per subscriber in connection with price increase implemented in the second quarter of 2005.

For the fourth quarter, subscriber acquisition cost (SAC), a component of cost per gross addition (CPGA), was $70, compared with $89 in the same period last year. CPGA in the fourth quarter was $128 compared with $141 in the same period last year. For full-year 2006, SAC was $64, consistent with $64 in 2005, and CPGA was $108, compared with $109 in 2005.

XM reported an adjusted EBITDA loss of $69.8 million for the fourth quarter of 2006, an improvement from the adjusted EBITDA loss of $172.9 million reported in the fourth quarter of 2005.

For the full-year, XM reported an adjusted EBITDA loss of $166.2 million, down from the full-year 2005 adjusted EBITDA loss of $403.7 million. The decline in adjusted EBITDA loss primarily resulted from an increase in subscribers, growth in subscription margin and lower marketing costs.

Net loss for the fourth quarter of 2006 was $256.7 million, which included the following non-cash items totaling $79.0 million of the net loss, a charge of $57.6 million to reflect an impairment in its 23 percent ownership in Canadian Satellite Radio and charges of $21.4 million from the balance sheet restructuring. XM's net loss for the fourth quarter of 2005 was $268.3 million, which included charges of $25.3 million from a balance sheet restructuring.

Full-year net loss was $718.9 million, which included the following non-cash items totaling $198.8 million of the net loss: impairment charges of $76.6 million in investments in WorldSpace and Canadian Satellite Radio and charges of $122.2 million from a balance sheet restructuring. XM's net loss for the full year 2005 was $666.7 million, which included charges of $27.6 million from a balance sheet restructuring.

The first phase of the approval process begins Wednesday when the House Judiciary Committee begins hearings on the matter. XM said in its financial statement that pending regulatory approval, the companies expect the transaction to be completed by the end of 2007.