XM Radio 2012 Annual Report Download - page 72

Changes in operating assets and liabilities increased operating cash flows for the years ended December 31,
2012, 2011 and 2010 by $92,130, $49,694 and $112,097, respectively. As we continue to grow our subscriber
and revenue base, we expect that deferred revenue and amounts due from customers and distributors will
continue to increase. Amounts payable to vendors are also expected to increase as our business grows. The
timing of payments to vendors and related parties are based in part on contractual commitments.
Cash Flows Used in Investing Activities
Cash used for investing activities consists primarily of capital expenditures for property and equipment. We
will continue to incur significant costs to improve our terrestrial repeater network and broadcast and
administrative infrastructure. In addition, we will continue to incur capital expenditures associated with our FM-6
satellite. After the launch of our FM-6 satellite, we anticipate no significant satellite capital expenditures for
several years until it becomes necessary to replace satellites in our fleet.
• The decrease in cash used for investing activities was primarily due to lower satellite and related launch
vehicle construction costs associated with our FM-6 satellite which is expected to launch in mid-2013 and
following the launch of our XM-5 satellite in 2010.
Cash Flows Used in Financing Activities
Cash flows used in financing activities consists of the issuance and repayment of long-term debt and related
party debt, cash proceeds from exercise of stock options and the issuance of a special cash dividend. Proceeds
from long-term debt, related party debt and equity issuances have been used to fund our operations, construct and
launch new satellites and invest in other infrastructure improvements.
• Cash flows used in financing activities in 2012 were primarily due to the repayment of the remaining
balance of our 13% Senior Notes due 2013 and our 9.75% Senior Secured Notes due 2015, partially offset
by the issuance of our 5.25% Senior Notes due 2022 and the exercise of stock options. The cash flows
used in financing activities in 2011 were the result of the repayment of the remaining balance of our
11.25% Senior Secured Notes due 2013 and 3.25% Convertible Notes due 2011. In 2010, we repaid our
Senior Secured Term Loan due 2012, 9.625% Senior Notes due 2013, XM’s 10% Senior PIK Secured
Notes due 2011 and 9.75% Senior Notes due 2014. We also partially repaid XM’s 11.25% Senior Secured
Notes due 2013 and our 3.25% Convertible Notes due 2011 and paid a special cash dividend of
approximately $327,000 during the fourth quarter of 2012 described below under “Special Dividend”. We
issued the following new debt in 2010: our 8.75% Senior Notes due 2015 and 7.625% Senior Notes due
2018.
Financings and Capital Requirements
We have historically financed our operations through the sale of debt and equity securities.
Future Liquidity and Capital Resource Requirements
We have entered into various agreements to design, construct and launch our satellites in the normal course
of business. As disclosed in Note 15 to our consolidated financial statements in this Annual Report, as of
December 31, 2012, we expect to incur satellite and transmission related expenditures of approximately $67,170
and $27,620 in 2013 and 2014, respectively, and an additional $42,043 thereafter, the majority of which is
attributable to the construction and expected launch of our FM-6 satellite and related launch vehicle in 2013.
Based upon our current business plans, we believe that we have sufficient cash, cash equivalents and
marketable securities to cover our estimated short-term and long-term funding needs. In 2012, we entered into a
five year Senior Secured Revolving Credit Facility (“Credit Facility”) which will be used for working capital and
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