XM Radio 2012 Annual Report Download - page 82

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Free cash flow — is derived from cash flow provided by operating activities, capital expenditures and
restricted and other investment activity. Free cash flow is calculated as follows (in thousands):
Unaudited
For the Years Ended December 31,
2012 2011 2010
Cash Flow information
Net cash provided by operating activities ........................... $806,765 $ 543,630 $ 512,895
Net cash used in investing activities ............................... $ (97,319) $(127,888) $(302,414)
Net cash used in financing activities ............................... $(962,491) $(228,443) $ (7,279)
Free Cash Flow
Net cash provided by operating activities ........................... $806,765 $ 543,630 $ 512,895
Additions to property and equipment ............................. (97,293) (137,429) (311,868)
Restricted and other investment activity .......................... (26) 9,541 9,454
Free cash flow ................................................ $709,446 $ 415,742 $ 210,481
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. The metric excludes rental and fleet vehicles.
Subscriber acquisition cost, per gross subscriber addition — or SAC, per gross subscriber addition, is
derived from subscriber acquisition costs and margins from the 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,
2012 2011 2010
Subscriber acquisition costs (GAAP) ............................ $ 474,697 $ 434,482 $ 413,041
Less: margin from direct sales of radios and accessories (GAAP) ...... (41,690) (37,956) (36,074)
Add: purchase price accounting adjustments ...................... 90,503 85,491 79,439
$ 523,510 $ 482,017 $ 456,406
Gross subscriber additions .................................... 9,617,771 8,696,020 7,768,827
SAC, per gross subscriber addition .............................. $ 54 $ 55 $ 59
26