XM Radio 2012 Annual Report Download - page 57

Special Note About Forward-Looking Statements
We have made various statements in this Annual Report that may constitute “forward-looking statements” within the meaning
of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may also be made in our other reports filed
with or furnished to the SEC, in our press releases and in other documents. In addition, from time to time, we, through our
management, may make oral forward-looking statements. Forward-looking statements are subject to risks and uncertainties,
including those identified above, which could cause actual results to differ materially from such statements. The words “will likely
result,” “are expected to,” “will continue,” “is anticipated,” “estimated,” “believe,” “intend,” “plan,” “may,” “should,” “could,”
“would,” “likely,” “projection,” “outlook” and similar expressions are intended to identify forward-looking statements. We caution
you that the risk factors described above are not exclusive. There may also be other risks that we are unable to predict at this time
that may cause actual results to differ materially from those in forward-looking statements. New factors emerge from time to time,
and it is not possible for us to predict which will arise or to assess with any precision the impact of each factor on our business or
the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any
forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak
only as of the date on which they are made. We undertake no obligation to update publicly or revise any forward-looking
statements.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(All dollar amounts referenced in this Section are in thousands, unless otherwise stated)
Executive Summary
We broadcast our music, sports, entertainment, comedy, talk, news, traffic and weather channels, as well as infotainment
services in the United States on a subscription fee basis through our two proprietary satellite radio systems. Subscribers can also
receive our music and other channels, plus new features such as SiriusXM On Demand, over the Internet, including through
applications for mobile devices.
We have agreements with every major automaker (“OEMs”) to offer satellite radios as factory- or dealer-installed equipment
in their vehicles from which we acquire the majority of our subscribers. We also acquire subscribers through the sale or lease of
previously owned vehicles with factory-installed satellite radios. Additionally, we distribute our satellite radios through retail
locations nationwide and through our website. Satellite radio services are also offered to customers of certain daily rental car
companies.
As of December 31, 2012, we had 23,900,336 subscribers of which 19,570,274 were self-pay subscribers and 4,330,062 were
paid promotional subscribers. Our subscriber totals include subscribers under our regular pricing plans; discounted pricing plans;
subscribers that have prepaid, including payments either made or due from automakers for subscriptions included in the sale or
lease price of a vehicle; certain radios activated for daily rental fleet programs; subscribers to our Internet services who do not also
have satellite radio subscriptions; and certain subscribers to our weather, traffic, data and Backseat TV services.
Our primary source of revenue is subscription fees, with most of our customers subscribing on an annual, semi-annual,
quarterly or monthly basis. We offer discounts for prepaid and long-term subscription plans, as well as discounts for multiple
subscriptions on each platform. We also derive revenue from other subscription-related fees, the sale of advertising on select non-
music channels, the direct sale of satellite radios, components and accessories, and other ancillary services, such as our Internet
radio, Backseat TV, data, traffic, and weather services.
In certain cases, automakers include a subscription to our radio services in the sale or lease price of new and previously owned
vehicles. The length of these prepaid subscriptions varies, but is typically three to twelve months. In many cases, we receive
subscription payments from automakers in advance of the activation of our service. We also reimburse various automakers for
certain costs associated with satellite radios installed in their vehicles.
As of January 17, 2013, Liberty Media Corporation beneficially owned, directly and indirectly, over 50% of the outstanding
shares of our common stock. Liberty Media owns interests in a broad range of media, communications and entertainment
businesses, including its subsidiaries Atlanta National League Baseball Club, Inc. and TruePosition, Inc., its interests in Live Nation
Entertainment, Barnes & Noble, and minority equity investments in Time Warner Inc. and Viacom.
We also have an equity interest in Sirius XM Canada which offers satellite radio services in Canada. Subscribers to the Sirius
XM Canada service are not included in our subscriber count.
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