XM Radio 2009 Annual Report Download - page 114

Unaudited Pro Forma Results of Operations. Set forth below are certain pro forma items that give effect to
the Merger as if it had occurred on January 1, 2007. The pro forma information below does not give effect to any
adjustments as a result of the purchase price accounting for the Merger, or the goodwill impairment charge taken
during 2008. See footnote 8 (pages 34 to 35) and footnote 14 (page 40) for a reconciliation of net income (loss) to
adjusted income (loss) from operations.
2009 2008 2007
For the Three Months Ended December 31,
Unaudited Pro Forma
(In thousands)
Revenue:
Subscriber revenue, including effects of rebates.......... $593,841 $ 588,622 $ 501,595
Advertising revenue, net of agency fees ............... 14,467 15,776 20,571
Equipment revenue............................... 19,008 30,712 25,133
Other revenue .................................. 56,463 8,998 10,216
Total revenue ..................................... 683,779 644,108 557,515
Operating expenses:
Satellite and transmission .......................... 25,094 22,851 23,697
Programming and content .......................... 92,857 105,215 109,076
Revenue share and royalties ........................ 124,527 122,711 163,541
Customer service and billing ....................... 58,887 67,036 65,006
Cost of equipment ............................... 12,200 18,084 37,334
Sales and marketing .............................. 80,161 81,712 123,711
Subscriber acquisition costs ........................ 127,588 132,731 180,767
General and administrative ......................... 39,108 51,591 64,223
Engineering, design and development ................. 8,018 10,380 14,303
Depreciation and amortization ...................... 57,549 49,519 75,045
Restructuring, impairments and related costs ............ 2,640 2,977 —
Share-based payment expense ....................... 7,480 24,945 52,897
Total operating expenses ............................ 636,109 689,752 909,600
Income (loss) from operations ........................ 47,670 (45,644) (352,085)
Other expense .................................. (70,276) (202,649) (52,055)
Loss before income taxes ............................ (22,606) (248,293) (404,140)
Income tax expense .............................. (2,637) (175) (901)
Net loss......................................... $(25,243) $(248,468) $(405,041)
Highlights for the Three Months Ended December 31, 2009. Our revenue grew 6%, or $39,671, in the three
months ended December 31, 2009 compared to 2008. Subscriber revenue increased 1%, or $5,219, in the three
months ended December 31, 2009 compared to 2008. The increase in subscriber revenue was driven by the sale of
“Best of” programming and the price increases to our multi-subscription and internet packages. Advertising
revenue decreased 8%, or $1,309, in the three months ended December 31, 2009 compared to 2008. The decrease in
advertising revenue was driven by the current economic environment. Equipment revenue decreased 38%, or
$11,704, in the three months ended December 31, 2009 compared to 2008. The decrease in equipment revenue was
driven by declines in sales through our direct to consumer distribution channel and lower product royalties. Other
revenue increased 528%, or $47,465, in the three months ended December 31, 2009 compared to 2008. The increase
in other revenue was driven by the U.S. Music Royalty Fee introduced in the third quarter of 2009. The overall
increase in revenue, combined with a decrease of 7%, or $43,871, in adjusted operating costs (total operating
expense excluding restructuring, impairments and related costs, depreciation and amortization and share-based
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