XM Radio 2010 Annual Report Download - page 79
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date attributable to an OEM. SAC, per gross subscriber addition, is calculated as follows (in thousands, except
for subscriber and per subscriber amounts):
2010 2009 2008
For the Years Ended December 31,
Unaudited
Subscriber acquisition costs:
GAAP ...................................... $ 413,041 $ 340,506 $ 371,343
Predecessor financial information .................. — — 174,083
Less: margin from direct sales of radios and accessories:
GAAP ...................................... (36,074) (10,164) (9,910)
Predecessor financial information .................. — — 6,616
Less: share-based payment expense granted to third parties
and employees (GAAP) ......................... — — (14)
Add: purchase price accounting adjustments ............ 79,439 61,164 31,714
$ 456,406 $ 391,506 $ 573,832
Gross subscriber additions ......................... 7,768,827 6,208,482 7,710,306
SAC, per gross subscriber addition ................... $ 59 $ 63 $ 74
(5) 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 asso-
ciated 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):
2010 2009 2008
For the Years Ended December 31,
Unaudited
Customer service and billing expenses:
GAAP . .................................. $ 241,680 $ 234,456 $ 165,036
Predecessor financial information ............... — — 82,947
Less: share-based payment expense, net of purchase
price accounting adjustments:
GAAP . .................................. (2,207) (2,504) (2,112)
Predecessor financial information ............... — — (1,869)
Add: purchase price accounting adjustments ......... 281 453 193
$ 239,754 $ 232,405 $ 244,195
Daily weighted average number of subscribers ....... 19,385,055 18,529,696 18,373,274
Customer service and billing expenses, per average
subscriber ................................. $ 1.03 $ 1.05 $ 1.11
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