XM Radio 2012 Annual Report Download - page 81

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ARPU — is derived from total earned subscriber revenue, net advertising revenue and other subscription-
related revenue, net of purchase price accounting adjustments, divided by the number of months in the period,
divided by the daily weighted average number of subscribers for the period. Other subscription-related revenue
includes the U.S. Music Royalty Fee. Purchase price accounting adjustments include the recognition of deferred
subscriber revenues not recognized in purchase price accounting associated with the Merger. ARPU is calculated
as follows (in thousands, except for subscriber and per subscriber amounts):
Unaudited
For the Years Ended December 31,
2012 2011 2010
Subscriber revenue (GAAP) ..................... $ 2,962,665 $ 2,595,414 $ 2,414,174
Add: net advertising revenue (GAAP) ............. 82,320 73,672 64,517
Add: other subscription-related revenue (GAAP) ..... 237,868 231,902 234,148
Add: purchase price accounting adjustments ........ 228 3,659 14,655
$ 3,283,081 $ 2,904,647 $ 2,727,494
Daily weighted average number of subscribers ...... 22,794,170 20,903,908 19,385,055
ARPU ...................................... $ 12.00 $ 11.58 $ 11.73
Average self-pay monthly churn — is defined as the monthly average of self-pay deactivations for the
period divided by the average number of self-pay subscribers for the period.
Customer service and billing expenses, per average subscriber — is derived from total customer service
and billing expenses, excluding share-based payment expense and purchase price accounting adjustments
associated with the Merger, divided by the number of months in the period, divided by the daily weighted
average number of subscribers for the period. We believe the exclusion of share-based payment expense in our
calculation of customer service and billing expenses, per average subscriber, is useful given the significant
variation in expense that can result from changes in the fair market value of our common stock, the effect of
which is unrelated to the operational conditions that give rise to variations in the components of our customer
service and billing expenses. Purchase price accounting adjustments associated with the Merger include the
elimination of the benefit associated with incremental share-based payment arrangements recognized at the
Merger date. Customer service and billing expenses, per average subscriber, is calculated as follows (in
thousands, except for subscriber and per subscriber amounts):
Unaudited
For the Years Ended December 31,
2012 2011 2010
Customer service and billing expenses (GAAP) ...... $ 294,980 $ 259,719 $ 241,680
Less: share-based payment expense, net of purchase
price accounting adjustments .................. (1,847) (1,502) (2,207)
Add: purchase price accounting adjustments ........ — 18 281
$ 293,133 $ 258,235 $ 239,754
Daily weighted average number of subscribers ...... 22,794,170 20,903,908 19,385,055
Customer service and billing expenses, per average
subscriber ................................. $ 1.07 $ 1.03 $ 1.03
25