XM Radio 1999 Annual Report Download - page 25

23 1999 ANNUAL REPORT
by the FCC of a change in control. In return, Holdings has agreed not to issue new voting securities, other than
the units issued on March 15, 2000 and other than up to 2,000,000 shares of Class A common stock (except
upon conversion or exercise of existing securities or under our employee stock plans), if it would make these
holders unable to convert any of their non-voting securities. We have filed an application with the FCC to permit
American Mobile’s voting power of Holdings to be reduced to 40% after giving effect to the conversion of all of
Holdings’ outstanding common stock equivalents. We may not, however, be able to obtain approval of our
application from the FCC or it may take a long period of time to obtain such approval and there may be
conditions imposed in connection with such approval which may be unfavorable to us. The inability to raise
capital opportunistically, or at all, could adversely affect our business plan.
We may not be able to raise any funds or obtain loans on favorable terms or at all. Our ability to obtain the
required financing depends on several factors, including future market conditions; our success or lack of success
in developing, implementing and marketing our satellite radio service; our future creditworthiness; and restrictions
contained in agreements with our investors or lenders. If we fail to obtain any necessary financing on a timely
basis, a number of adverse effects could occur. Our satellite construction and launch and other events necessary
to our business could be materially delayed or their costs could materially increase. We could default on our
commitments to our satellite construction or launch contractors, creditors or others, leading to termination of
construction or inability to launch our satellites. Finally, we may not be able to launch our satellite radio service as
planned and may have to discontinue operations or seek a purchaser for our business or assets.
Our expected sources and uses of funds through commencement of commercial operations are as follows:
Inception Through Commercial Launch
(in millions)
Sources of Funds
Total funds raised to date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 865.0
Future capital requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 235.0
Total sources. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,100.0
Uses of Funds
Satellites and launch. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 472.6
Launch insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50.0
Terrestrial repeater system . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 263.3
Ground segment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65.9
Total system . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 851.8
FCC license. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90.0
Operating expenses and working capital requirements . . . . . . . . . . . 158.2
Total uses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,100.0
The sources and uses chart for inception through commercial launch assumes that we will commence full
commercial operations in the second quarter of 2001 and does not include net interest income or expense of
any future offerings or other financings. We anticipate that we will need substantial further funding after
commencement of operations to cover our cash requirements before we generate positive cash flow from
operations. Many factors, including our ability to generate significant revenues, could affect this estimate.
Total funds raised to date in the chart above include proceeds of
• $9.2 million in equity contributions and an additional $157.8 million in equity from converted debt
instruments funded by American Mobile and by a former investor who sold its investment to American Mobile.
• $238.7 million in net proceeds from convertible notes which were converted to Class A common stock
and Series A convertible preferred stock on October 8, 1999 as a result of our initial public offering. $75.0
million of these proceeds were used to repay outstanding debt.
• $114.1 million in net proceeds from our initial public offering.