XM Radio 2008 Annual Report Download - page 46

performance of other communications, entertainment and media companies. We believe that investors use
current and projected adjusted income (loss) from operations to estimate our current or prospective enterprise
value and to make investment decisions.
Because we fund and build-out our satellite radio system through the periodic raising and expenditure of large
amounts of capital, our results of operations reflect significant charges for interest and depreciation expense.
We believe adjusted income (loss) from operations provides useful information about the operating perfor-
mance of our business apart from the costs associated with our capital structure and physical plant. The
exclusion of interest and depreciation expense is useful given fluctuations in interest rates and significant
variation in depreciation and amortization expense that can result from the amount and timing of capital
expenditures and potential variations in estimated useful lives, all of which can vary widely across different
industries or among companies within the same industry. We believe the exclusion of taxes is appropriate for
comparability purposes as the tax positions of companies can vary because of their differing abilities to take
advantage of tax benefits and because of the tax policies of the various jurisdictions in which they operate. We
believe the exclusion of restructuring and related costs and impairment of goodwill is useful given the non-
recurring nature of these transactions. We also believe the exclusion of share-based payment expense is useful
given the significant variation in expense that can result from changes in the fair market value of our common
stock. To compensate for the exclusion of taxes, other income (expense), depreciation and amortization and
share-based payment expense, we separately measure and budget for these items.
There are material limitations associated with the use of adjusted income (loss) from operations in evaluating
our company compared with net loss, which reflects overall financial performance, including the effects of
taxes, other income (expense), depreciation and share-based payment expense. We use adjusted income (loss)
from operations to supplement GAAP results to provide a more complete understanding of the factors and
trends affecting the business than GAAP results alone. Investors that wish to compare and evaluate our
operating results after giving effect for these costs, should refer to net loss as disclosed in our audited
consolidated statements of operations. Since adjusted income (loss) from operations is a non-GAAP financial
measure, our calculation of adjusted income (loss) from operations 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, as a substitute for, or superior to measures of financial performance prepared in accordance with
GAAP.
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