XM Radio 2011 Annual Report Download - page 57

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Special Note About Forward-Looking Statements
We have made various statements in the annual report that may constitute “forward-looking statements”
within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may
also be made in our other reports filed with or furnished to the SEC, in our press releases and in other documents.
In addition, from time to time, we, through our management, may make oral forward-looking statements.
Forward-looking statements are subject to risks and uncertainties, including those identified above, which could
cause actual results to differ materially from such statements. The words “will likely result,” “are expected to,”
“will continue,” “is anticipated,” “estimated,” “believe,” “intend,” “plan,” “may,” “should,” “could,” “would,”
“likely,” “projection,” “outlook” and similar expressions are intended to identify forward-looking statements. We
caution you that the risk factors described above are not exclusive. There may also be other risks that we are
unable to predict at this time that may cause actual results to differ materially from those in forward-looking
statements. New factors emerge from time to time, and it is not possible for us to predict which will arise or to
assess with any precision the impact of each factor on our business or the extent to which any factor, or
combination of factors, may cause actual results to differ materially from those contained in any forward-looking
statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak
only as of the date on which they are made. We undertake no obligation to update publicly or revise any forward-
looking statements.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
(All dollar amounts referenced in this Section are in thousands, unless otherwise stated)
Executive Summary
We broadcast our music, sports, entertainment, comedy, talk, news, traffic and weather channels in the United
States on a subscription fee basis through two proprietary satellite radio systems. Subscribers can also receive
certain of our music and other channels over the Internet, including through applications for mobile devices.
We have agreements with every major automaker (“OEMs”) to offer satellite radios as factory- or dealer-
installed equipment in their vehicles. We also distribute our satellite radios through retail locations nationwide and
through our website. Satellite radio services are also offered to customers of certain daily rental car companies.
As of December 31, 2011, we had 21,892,824 subscribers. Our subscriber totals include subscribers under
our regular pricing plans; discounted pricing plans; subscribers that have prepaid, including payments either
made or due from automakers for subscriptions included in the sale or lease price of a vehicle; activated radios in
daily rental fleet vehicles; certain subscribers to our Internet services; and certain subscribers to our weather,
traffic, data and video services.
Our primary source of revenue is subscription fees, with most of our customers subscribing on an annual,
semi-annual, quarterly or monthly basis. We offer discounts for prepaid and long-term subscription plans, as well
as discounts for multiple subscriptions on each platform. We also derive revenue from activation and other
subscription-related fees, the sale of advertising on select non-music channels, the direct sale of satellite radios,
components and accessories, and other ancillary services, such as our Backseat TV, data and weather services.
In certain cases, automakers include a subscription to our radio services in the sale or lease price of new and
pre-owned vehicles. The length of these prepaid subscriptions varies, but is typically three to twelve months. In
many cases, we receive subscription payments from automakers in advance of the activation of our service. We
also reimburse various automakers for certain costs associated with satellite radios installed in their vehicles.
We also have an equity interest in the satellite radio services offered in Canada. Subscribers to the Sirius
XM Canada service are not included in our subscriber count. In June 2011, Canadian Satellite Radio Holdings
Inc. (“CSR”), the parent company of XM Canada, and Sirius Canada completed a transaction to combine their
operations (“the Canada Merger”).
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