XM Radio 2000 Annual Report Download

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RADiO
X
2000 ANNUAL REPORT
RADiOTOTHEPOWEROFX

Table of contents

  • Page 1
    R A D iO X RADiO TO THE POWER OF X 2000 A N N U A L R E P O R T

  • Page 2
    CONTENTS 1 Letter to Shareholders 4 x Technology 6 x Radios 8 x Music 10 x Entertainment 12 x Experience 14 x Marketing 16 x Partnership 18 x Management 19 Financials

  • Page 3
    ... XM Ready radios are being sold at retail today, requiring only an XM tuner module and antenna, available this summer. • Experience to the Power of X: XM listeners will enjoy nearperfect sound generated by next-generation digital signal processing technology...originating from the XM Broadcast...

  • Page 4
    ... General Motors; fifteen radio manufacturing partners; along with America's largest electronics retailers, including Best Buy, Circuit City, Sears and RadioShack franchise dealers, plus other leading retailers serving key regional markets. • Management to the Power of X: XM has continued to build...

  • Page 5
    LEADERSHiPX 3

  • Page 6
    T E C H N O L O G YX 4

  • Page 7
    ... Digital Voice Systems, among others. "Circuit City offers customers a broad selection of name-brand consumer electronics products. Satellite radio is an exciting new technology, and we are delighted to include quality XM products in our selection." CIRCUIT CITY John Froman Executive Vice President...

  • Page 8
    ...satellite radio reception. • Distribution. Agreements with General Motors, the world's leading automobile manufacturer, and other automakers will ensure XM radios reach new cars, and replacement or aftermarket radios will be available at consumer electronics retailers you know and trust, like Best...

  • Page 9
    R A D iO SX 7

  • Page 10
    ... America. In addition, we'll create specialty original music channels with the help of partners such as: Clear Channel Communications, the leader in AM/FM radio broadcasting; The Country Music Hall-of-Fame, from which XM will broadcast a live, daily, five-hour show featuring Country's newest stars...

  • Page 11
    M U S iCX 9

  • Page 12
    XM has brought together over 100 of the most creative programmers, producers and on-air talent to help create amazing radio. E N T E R TA iN M E N T X 10

  • Page 13
    ... 24-hour financial and business news service • CNN News Group, a pioneer at the forefront of the global information age • Discovery Communications, the leading global real-world media and entertainment company • NASCAR, America's most popular spectator sport • Sporting News Radio, the nation...

  • Page 14
    E X P E R iE N C EX 12

  • Page 15
    ... City. XM sound quality will set a new standard for radio, thanks to the use of next-generation digital signal processing technology based on shared, decentralized digital audio components. All production will be fully digitized with immediate access to shared resources on powerful computer systems...

  • Page 16
    ... XM Satellite Radio, we're able to offer an unprecedented level of control over content - putting people in charge of their entertainment options, and helping to enhance the quality of their personal time." BEST BUY Mike London, Executive Vice-President General Merchandise MARKETiNG TO THE POWER...

  • Page 17
    M A R K E T iN GX 15

  • Page 18
    PA R T N E R S H iPX 16

  • Page 19
    ...GM, two of our goals are to be fast to market with exceptional products and technology, and XM Satellite Radio is an excellent example of how we're doing that." GENERAL MOTORS Ron Zarella President GM North America STRATEGiC PARTNERS iNVEST iN OUR ViSiON XM SATELLiTE RADiO 2000 Annual Report...

  • Page 20
    ...and implementing the technology, attracting the programming partners and talent, working with radio and auto manufacturers, and putting together the marketing strategy and business plan that will enable XM to launch its service in Summer 2001. MANAGEMENTX 18 XM SATELLiTE RADiO 2000 Annual Report

  • Page 21
    FiNANCiALS 2000 2 0 0 0 F i N A N C i A L i N F O R M AT i O N FiN A N CiA L S XM SATELLiTE RADiO 2000 Annual Report 19

  • Page 22
    ... Statements of Operations 30 Consolidated Statements of Stockholders' Equity (Deficit) 32 Consolidated Statements of Cash Flows 33 Notes to Consolidated Financial Statements 49 Independent Auditors' Report 50 Corporate Information, Stockholder Information 20 XM SATELLiTE Radio 2000 Annual Report

  • Page 23
    ... FCC to provide satellite radio service. Our principal activities to date have included: • designing and developing the XM Radio system; • negotiating contracts with satellite and launch vehicle operators, specialty programmers, radio manufacturers and car manufacturers; • developing technical...

  • Page 24
    ... interest expense as discussed above and additional general and administration expenses, primarily due to increased headcount and facility expenses, in preparation for commercial operations and the commencement of amortization of goodwill and intangibles. 22 XM SATELLiTE RADiO 2000 Annual Report

  • Page 25
    ...reduced earnings available to common stockholders. The issuance of the Series C preferred stock also caused the exercise price of the warrants sold in March 2000 to be adjusted to $47.94 and the number of warrant shares to be increased to 8.285948 per warrant. XM SATELLiTE RADiO 2000 Annual Report...

  • Page 26
    ... arbitration. We cannot predict at this time the amount of license fees or contribution payable by us or Sirius Radio or the size of the credits to us and Sirius Radio from the use of the other's technology. This may require significant additional capital. XM SATELLiTE RADiO 2000 Annual Report 24

  • Page 27
    ... cost for further changes in the stock price after the award vests is recognized immediately. The effects of implementing FIN 44 required us to recognize additional non-cash compensation of $1.2 million during the fiscal year ended December 31, 2000. XM SATELLiTE RADiO 2000 Annual Report...

  • Page 28
    ... market rates. Under our current policies, we do not use interest rate derivative instruments to manage our exposure to interest rate fluctuations. Additionally, we believe that our exposure to interest rate risk is not material to our results of operations. 26 XM SATELLiTE RADiO 2000 Annual...

  • Page 29
    ...) 120,170 $ 224,903 - 161,166 362,358 805,563 515,189 1,293,218 212 262,665 30,172 337,266 485,017 955,952 Business activity for the period from December 15, 1992, which was our date of inception, through December 31, 1996 was insignificant. XM SATELLiTE RADiO 2000 Annual Report 27

  • Page 30
    RADiO TO THE POWER OF X C O N S O L i D AT E D B A L A N C E S H E E T S December 31, 1999 2000 (In thousands, except share data) ASSETS Current assets: Cash and cash equivalents ...$ Short-term investments ...Restricted investments ...Prepaid and other current assets ...Total current assets ......

  • Page 31
    ...share data) 2000 December 15, 1992 (Date of Inception) to December 31, 2000 Revenue ...$ - Operating expenses: Research and development...6,941 Professional fees ...5,242 General...) - (123,042) (36,896) $ (201,338) (2.40) $ (4.15) 15,344,102 48,508,042 XM SATELLiTE RADiO 2000 Annual Report 29

  • Page 32
    ...subordinated convertible notes payable to related party ...- Increase in FCC license, goodwill and intangibles .. - Charge for beneficial conversion feature of note issued to Parent ...- Issuance of shares to employees through stock option and purchase plans ...- Non-cash stock compensation ...- Net...

  • Page 33
    ... used in operating activities: Depreciation and amortization ...Amortization of deferred financing fees ...Non-cash stock compensation ...Non-cash charge for beneficial conversion feature of note issued to Parent ...Changes in operating assets and liabilities: Increase in prepaid and other current...

  • Page 34
    ... American Mobile Satellite Corporation ("Motient" or "Parent"), for the purpose of procuring a digital audio radio service ("DARS") license. Business activity for the period from December 15, 1992 through December 31, 1996 was insignificant. Pursuant to various financing agreements entered into...

  • Page 35
    ...No. 115, Accounting for Certain Investments in Debt and Equity Securities, $49.6 million in money market funds for scheduled milestone payments under the Hughes Electronics Corporation contract and $5.1 million in certificates of deposit to collateralize letters of credit required by facility leases...

  • Page 36
    ... covered by FIN No. 44. The application resulted in additional compensation of $1,213,000 during the year ended December 31, 2000. Additional compensation charges may result depending upon the market value of the common stock at each balance sheet date. XM SATELLiTE RADiO 2000 Annual Report 35

  • Page 37
    ... (''FASB'') issued SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities. In June 2000 the FASB issued SFAS No. 138, Accounting for Certain Derivative Instruments and Certain Hedging Activity, an amendment of SFAS 133. SFAS No. 133 and XM SATELLiTE RADiO 2000 Annual Report 36

  • Page 38
    ...and development...$ 50 $ - $ 50 Professional fees...- 219 219 General and administrative...- 5 5 Total $ 50 $ 224 $ 274 Research and development...Professional fees...General and administrative...Total Year ended December 31, 2000 Motient $ - 252 - $ 252 XM SATELLiTE RADiO 2000 Annual Report 37

  • Page 39
    ...common stock (in the case of notes held by the other investors) at the election of the holders or upon the occurrence of certain events, including an initial public offering of a prescribed size. The conversion price was $9.52 aggregate principal amount of 38 XM SATELLiTE RADiO 2000 Annual Report

  • Page 40
    ...$111,437,000. On October 17, 1999, the underwriters of the Company's initial public offering exercised the over-allotment option for an additional 241,000 shares of Class A common stock at $12.00 per share. This exercise yielded net proceeds of $2,697,000. XM SATELLiTE RADiO 2000 Annual Report 39

  • Page 41
    ... earnings available to common stockholders. The issuance of the Series C preferred stock also caused the exercise price of the warrants sold in March 2000 to be adjusted to $47.94 and the number of warrant shares to be increased to 8.285948 per warrant. 40 XM SATELLiTE RADiO 2000 Annual Report

  • Page 42
    ... stock options exercisable at December 31, 1998, 1999 and 2000, respectively. There were 1,615,483 shares available under the plan for future grants at December 31, 2000. At December 31, 2000, all options have been issued to employees, officers and directors. XM SATELLiTE RADiO 2000 Annual Report...

  • Page 43
    ... the lesser of the market price of the common stock on the first or last business day of each offering period. As of December 31, 2000, 53,539 shares had been issued by the Company under this plan. The per share weighted-average fair value of purchase rights granted during the year was $3.30 and $11...

  • Page 44
    ... formal tax sharing agreement has been finalized, the Company was not compensated for the net operating losses. Had the Company filed on a standalone basis for the three-year period ending December 31, 2000, the Company's tax provision would be as follows: XM SATELLiTE RADiO 2000 Annual Report 43

  • Page 45
    ... future regular taxable income. These operating loss carryforwards expire between the years 2012 and 2020. Utilization of these net operating losses may be subject to limitations in the event of significant changes in the stock ownership of the Company. 44 XM SATELLiTE RADiO 2000 Annual Report

  • Page 46
    ...terrestrial systems and will require substantial additional financing to market and distribute the satellite-based radio service. Failure to obtain the required long-term financing will prevent the Company from realizing its objective of providing satellite-based radio programming. Management's plan...

  • Page 47
    ... are required for the system. As of December 31, 2000, the Company had paid $15,358,000 under this contract. (g) General Motors Distribution Agreement The Company has signed a long-term distribution agreement with the OnStar division of General Motors providing for the installation of XM radios in...

  • Page 48
    ... to fund one half of the development cost for a unified standard for satellite radios. Each party will be entitled to license fees or a credit towards its one half of the cost based upon the validity, value, use, importance and available alternatives of the technology it contributes. The amounts for...

  • Page 49
    RADiO TO THE POWER OF X (l) Leases The Company has noncancelable operating leases for office space and terrestrial repeater sites and noncancelable capital leases for equipment that expire over the next ten years. The future minimum lease payments under noncancelable leases as of December 31, 2000 ...

  • Page 50
    ... as a going concern. Management's plan in regard to these matters is also described in note 10. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. McLean, VA February 9, 2001 XM SATELLiTE RADiO 2000 Annual Report 49

  • Page 51
    ...Jack Shaw Corporate Senior Vice President - Enterprise Sector Hughes Electronics Corporation Dr. Rajendra Singh Chairman of the Members Committee Telcom Ventures L.L.C. Ronald L. Zarrella Executive Vice President, General Motors President, GM North America 50 XM SATELLiTE RADiO 2000 Annual Report

  • Page 52
    ... Policy XM Satellite Radio Holdings Inc. does not currently pay cash dividends on its Common Stock and does not plan to pay dividends in the foreseeable future. Stock Exchange XM Satellite Radio Holdings Inc. common stock is listed on the Nasdaq National Market® under the symbol XMSR. Annual...

  • Page 53
    1500 ECKiNGTON PLACE , NE WASHiNGTON , DC 20002-2194 PH 202 380 4000 FAX 202 380 4500 WWW. XMRADiO . COM