XM Radio 2011 Annual Report Download - page 84
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New vehicle consumer conversion rate — is defined as the percentage of owners and lessees of new
vehicles that receive our service and convert to become self-paying subscribers after the initial promotion period.
At the time satellite radio enabled vehicles are sold or leased, the owners or lessees generally receive trial
subscriptions ranging from three to twelve months. Promotional periods generally include the period of trial
service plus 30 days to handle the receipt and processing of payments. We measure conversion rate three months
after the period in which the trial service ends.
Subscriber acquisition cost, per gross subscriber addition — or SAC, per gross subscriber addition, is
derived from subscriber acquisition costs and margins from the direct sale of radios and accessories, excluding
share-based payment expense and purchase price accounting adjustments, divided by the number of gross
subscriber additions for the period. Purchase price accounting adjustments associated with the Merger include the
elimination of the benefit of amortization of deferred credits on executory contracts recognized at the Merger
date attributable to an OEM. SAC, per gross subscriber addition, is calculated as follows (in thousands, except
for subscriber and per subscriber amounts):
Unaudited
For the Years Ended December 31,
2011 2010 2009
Subscriber acquisition costs (GAAP) ................. $ 434,482 $ 413,041 $ 340,506
Less: margin from direct sales of radios and accessories
(GAAP) ...................................... (37,956) (36,074) (10,164)
Add: purchase price accounting adjustments ........... 85,491 79,439 61,164
$ 482,017 $ 456,406 $ 391,506
Gross subscriber additions ......................... 8,696,020 7,768,827 6,208,482
SAC, per gross subscriber addition ................... $ 55 $ 59 $ 63
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