XM Radio 2011 Annual Report Download - page 82

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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, which was initially charged to subscribers in the third quarter of 2009.
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,
2011 2010 2009
Subscriber revenue (GAAP) ..................... $ 2,595,414 $ 2,414,174 $ 2,287,503
Add: net advertising revenue (GAAP) ............. 73,672 64,517 51,754
Add: other subscription-related revenue (GAAP) ..... 231,902 234,148 48,679
Add: purchase price accounting adjustments ........ 3,659 14,655 46,814
$ 2,904,647 $ 2,727,494 $ 2,434,750
Daily weighted average number of subscribers ...... 20,903,908 19,385,055 18,529,696
ARPU ...................................... $ 11.58 $ 11.73 $ 10.95
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. Average self-pay churn for the year
is the average of the quarterly average self-pay churn.
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,
2011 2010 2009
Customer service and billing expenses (GAAP) ................. $ 259,719 $ 241,680 $ 234,456
Less: share-based payment expense, net of purchase price
accounting adjustments .................................. (1,502) (2,207) (2,504)
Add: purchase price accounting adjustments ................... 18 281 453
$ 258,235 $ 239,754 $ 232,405
Daily weighted average number of subscribers ................. 20,903,908 19,385,055 18,529,696
Customer service and billing expenses, per average subscriber ..... $ 1.03 $ 1.03 $ 1.05
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