XM Radio 2013 Annual Report Download - page 77

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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,
2013 2012 2011
Cash Flow information
Net cash provided by operating activities ............... $1,102,832 $ 806,765 $ 543,630
Net cash used in investing activities .................... $ (700,688) $ (97,319) $(127,888)
Net cash used in financing activities ................... $ (788,284) $(962,491) $(228,443)
Free Cash Flow
Net cash provided by operating activities ............... $1,102,832 $ 806,765 $ 543,630
Additions to property and equipment ................. (173,617) (97,293) (137,429)
Purchases of restricted and other investments .......... (1,719) (26) 9,541
Free cash flow ..................................... $ 927,496 $ 709,446 $ 415,742
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 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,
2013 2012 2011
Subscriber acquisition costs (GAAP) ................ $ 495,610 $ 474,697 $ 434,482
Less: margin from direct sales of radios and accessories
(GAAP) ..................................... (54,095) (41,690) (37,956)
Add: purchase price accounting adjustments .......... 64,365 90,503 85,491
$ 505,880 $ 523,510 $ 482,017
Gross subscriber additions ........................ 10,136,381 9,617,771 8,696,020
SAC, per gross subscriber addition .................. $ 50 $ 54 $ 55
25