XM Radio 2012 Annual Report Download - page 73

other general corporate purposes, including financing acquisitions, share repurchases and dividends. We expect
to fund operating expenses, capital expenditures, working capital requirements, interest payments, taxes and
scheduled maturities of our debt with existing cash, cash flow from operations and our Credit Facility, which we
believe will be sufficient to meet our cash requirements.
Our ability to meet our debt and other obligations depends on our future operating performance and on
economic, financial, competitive and other factors. We continually review our operations for opportunities to
adjust the timing of expenditures to ensure that sufficient resources are maintained.
We regularly evaluate our business plans and strategy. These evaluations often result in changes to our
business plans and strategy, some of which may be material and significantly change our cash requirements.
These changes in our business plans or strategy may include: the acquisition of unique or compelling
programming; the introduction of new features or services; significant new or enhanced distribution
arrangements; investments in infrastructure, such as satellites, equipment or radio spectrum; and acquisitions,
including acquisitions that are not directly related to our satellite radio business.
Special Dividend
On December 28, 2012, we paid a special cash dividend of $0.05 per share of common stock. This was the
first cash dividend ever paid to our stockholders. Our Series B-1 Preferred Stock held by Liberty Radio, LLC, a
wholly-owned subsidiary of Liberty Media Corporation, participated in this cash dividend on an as-converted
basis in accordance with its terms. The total amount of this special dividend was approximately $327,000.
The dividend reflects the board’s desire to return value to stockholders and its confidence in the long-term
growth prospects of our business. We currently do not intend to declare recurring dividends on our common
stock. Our board of directors has not made any determination whether similar special cash dividends will be paid
in the future.
Our ability to pay dividends on our common stock is currently limited by covenants under our debt
agreements. We retain sufficient capital capacity to continue making long-term investments in our programming,
research and development initiatives and overall operations as well as pursue strategic opportunities which may
arise. See Note 12 to our consolidated financial statements included in this Annual Report.
Stock Repurchase Program
In December 2012, we announced that our board of directors approved a $2,000,000 common stock
repurchase program, which we will begin utilizing in 2013. Shares of common stock may be purchased from time
to time on the open market or in privately negotiated transactions.
7% Exchangeable Senior Subordinated Notes due 2014
As a result of Liberty Media Corporation’s beneficial ownership, a Fundamental Change occurred on
January 17, 2013 under the indenture governing the Exchangeable Notes. In accordance with the indenture, on
February 1, 2013, we made an offer to each holder of Exchangeable Notes to: (i) have the Company repurchase
his or her Exchangeable Notes at a purchase price in cash equal to $1,000 per $1,000 principal amount of the
Notes (plus accrued and unpaid interest to, but excluding March 1, 2013); or (ii) exchange his or her
Exchangeable Notes for our common stock, at an exchange rate of 581.3112 shares per $1,000 principal amount
of Notes, on or prior to March 1, 2013. This exchange rate is a benefit to the holders compared to an exchange
rate of 543.1372 shares of common stock in effect prior to occurrence of such Fundamental Change. A holder of
the Exchangeable Notes may also elect to retain his or her Notes pursuant to their terms through maturity on
December 1, 2014, or otherwise transfer or exchange them in the ordinary course. We believe that we have
sufficient resources to fund any required repurchases of the Exchangeable Notes.
17