##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 
 FORM 10-K
 
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 FOR FISCAL YEAR ENDED DECEMBER 31, 2009
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 FOR THE TRANSITION PERIOD FROM  TO
 Commission
    
    
    
    I.R.S. EmployerFile
    
    
    
    IdentificationNumber
    
    Exact name of Registrant As Specified in its Charter
    
    Number000-27441
    
    XM SATELLITE RADIO HOLDINGS INC.
    
    54-1878819333-39178
    
    XM SATELLITE RADIO INC.
    
    52-1805102
 DELAWARE
(State or other jurisdiction of incorporation or organization of both registrants)
1500 ECKINGTON PLACE, NE
WASHINGTON, DC 20002-2194
(Address of principal executive offices) (Zip code)
202-380-4000
(Registrants telephone number, including area code)
 
 Securities registered pursuant to Section 12(b) of the Act:
  Securities registered pursuant to Section 12(g) of the Act:
  (Title of Classes)
 Yes o No þ
 Yes o No þ
 þ o
 o o
 þ
  XM Satellite Radio Holdings Inc.
    
    Large Accelerated Filer
    
    o
    
    Accelerated Filer
    
    oNon-Accelerated Filer
    
    þ
    
    Smaller Reporting Company
    
    oXM Satellite Radio Inc.
    
    Large Accelerated Filer
    
    o
    
    Accelerated Filer
    
    o

Non-Accelerated Filer
    
    þ
    
    Smaller Reporting Company
    
    o
 o þ
   (Class)
    
    (Outstanding as of January 31, 2010)XM SATELLITE RADIO HOLDINGS INC.COMMON STOCK, $0.01 PAR VALUE(all shares are issued to Sirius XM Radio Inc.)
    
    100 SHARESXM
SATELLITE RADIO INC. 
COMMON STOCK, $0.10 PAR VALUE
(all shares are issued to XM Satellite Radio Holdings Inc.)
    
    125 SHARES
 DOCUMENTS INCORPORATED BY REFERENCE
THE REGISTRANTS MEET THE CONDITIONS SET FORTH IN GENERAL INSTRUCTIONS I(1)(a) AND (b) OF FORM 10-K
AND ARE THEREFORE FILING THIS FORM WITH THE REDUCED DISCLOSURE FORMAT.




---



##### 



XM SATELLITE RADIO HOLDINGS INC. AND SUBSIDIARIES
INDEX TO FORM 10-K
 Item No.
    
    Description
    
    

    PagePART IItem 1.
    
    Business
    
    
    2Item 1A.
    
    Risk Factors
    
    
    12Item 1B.
    
    Unresolved Staff Comments
    
    
    18Item 2.
    
    Properties
    
    
    18Item 3.
    
    Legal Proceedings
    
    
    18Item 4.
    
    Submission of Matters to a Vote of Security Holders*
    
    
    18PART IIItem 5.
    
    Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
    
    
    19Item 6.
    
    Selected Financial Data
    
    
    19Item 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    20Item 7A.
    
    Quantitative and Qualitative Disclosures About Market Risks
    
    
    57Item 8.
    
    Financial Statements and Supplementary Data
    
    
    57Item 9.
    
    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    57Item 9A.
    
    Controls and Procedures
    
    
    57Item 9B.
    
    Other Information
    
    
    57PART IIIItem 10.
    
    Directors, Executive Officers and Corporate Governance*
    
    
    58Item 11.
    
    Executive Compensation*
    
    
    58Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters*
    
    
    58Item 13.
    
    Certain Relationships and Related Transactions, and Director Independence*
    
    
    58Item 14.
    
    Principal Accounting Fees and Services
    
    
    58PART IVItem 15.
    
    Exhibits, Financial Statement Schedules
    
    
    59Signatures
    
    
    60Exhibit 21.1Exhibit 23.1Exhibit 31.1Exhibit 31.2Exhibit 31.3Exhibit 31.4Exhibit 32.1Exhibit 32.2
  
 *
    
    Omitted pursuant to General Instructions I(2)(c) of Form 10-K.




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EXPLANATORY NOTE
    
    
    we, us, our, the company, XM Holdings and similar terms refer to XM
Satellite Radio Holdings Inc. and its consolidated subsidiaries (including XM);
 
    
    SIRIUS refers to Sirius XM Radio Inc. and its consolidated subsidiaries;
 
    
    XM refers only to XM Satellite Radio Inc. and its consolidated subsidiaries.
  Special Note Regarding Forward-Looking Statements
   
    
    general economic conditions, which has adversely affected our business;
 
    
    our dependence upon automakers, many of which have experienced a dramatic drop
in sales, and other third parties, such as manufacturers and distributors of satellite
radios, retailers and programming providers;
 
    
    the substantial indebtedness of XM Holdings and XM;
 
    
    the useful life of our satellites, which have experienced component failures
including, with respect to a number of satellites, failures on their solar arrays, and, in
certain cases, are not insured; and
 
    
    our competitive position versus other forms of audio entertainment
including terrestrial radio, HD radio, Internet radio, mobile phones, iPods and other MP3
devices, and emerging next-generation networks and technologies.
   1




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PART I
 
 ITEM 1.
    
    BUSINESS
   
    
    subscribers under our regular and discounted pricing plans;
 
    
    subscribers that have prepaid, including payments either made or due from
automakers for prepaid subscriptions included in the sale or lease price of a new vehicle;
 
    
    certain radios activated for daily rental fleet programs;
 
    
    certain subscribers to XM Online, our Internet service; and
 
    
    certain subscribers to our weather, traffic and data services.
    Programming
     Music Programming
  Artist Confidential
  2




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Sports Programming
  Mad Dog Unleashed SportsCenter
 Talk and Entertainment Programming
   News and Information Programming
    Distribution of Radios
 Automakers
   Retail
  Previously Owned Vehicles
   Our Satellite Radio System
   3




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
    
    satellites, terrestrial repeaters and other satellite facilities;
 
    
    studios; and
 
    
    satellite radios.
 Satellites, Terrestrial Repeaters and Other Satellite Facilities
 Satellites
  Satellite Insurance
  Terrestrial Repeaters
 Other Satellite Facilities
 Studios
  Satellite Radios
   
    
    In-dash radios are integrated into vehicles and allow the user to listen to AM,
FM or satellite radio with the push of a button. Aftermarket in-dash radios are available
at retailers nationally, and to automakers for factory or dealer installation.
 
    
    Dock & Play radios enable subscribers to transport their XM radios easily to
and from their cars, trucks, homes, offices, boats or other locations with available
adapter kits. Dock & Play radios adapt to existing audio systems through FM modulation or
direct audio connection and can be easily installed. Audio systems and boom boxes, which
enable subscribers to use their XM radios virtually anywhere, are available for various
models of Dock & Play radios.
 
    
    Portable or wearable radios offer live satellite radio on the go and recorded
satellite, MP3 and WMA content. The XMp3 allows consumers to record up to one hundred
hours of XM and Best of Sirius programming, and is capable of recording up to five
channels simultaneously.
  4




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Internet Radio
  Canada
  Other Services
 Commercial Accounts.
 XM Content Through Mobile Phone Carriers.
  Real-Time Traffic Services
 Real-Time Weather Services
 FCC Conditions
  Programming
 Best of Both Programming:
 Mostly Music or News, Sports and Talk Programming:
 Discounted Family-Friendly Programming:
  5




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Public Interest Channels
  Qualified Public Entity Channels
   Equipment
   Subscription Rates
  Interoperable Radios
  Local Programming and Advertising
  Transactions between SIRIUS, XM Holdings and XM
   6




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Competition
  Traditional AM/FM Radio
   HD Radio
  Internet Radio
   7




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Portable Audio Devices
 ® ® ®
 Direct Broadcast Satellite and Cable Audio
  Digital Media Services
  Traffic News Services
  Government Regulation
  
    
    the licensing of our satellite system;
 
    
    preventing interference with or to other users of radio frequencies; and
 
    
    compliance with FCC rules established specifically for U.S. satellites and
satellite radio services.
     8




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Copyrights to Programming
    Trademarks
  Personnel
   9




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Corporate Information
  Executive Officers of the Registrant
  Name
    
    Age
    
    PositionMel Karmazin
    
    
    66
    
    
    PresidentDavid J. Frear
    
    
    53
    
    
    TreasurerPatrick L. Donnelly
    
    
    48
    
    
    Secretary
 Mel Karmazin
 David J. Frear
 Patrick L. Donnelly
 Employment Agreements
 Mel Karmazin
  provided
  10




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David J. Frear
    Patrick L. Donnelly
     11




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ITEM 1A.
    
    RISK FACTORS
 In addition to the other information in this Annual Report on Form 10-K , including the
information under the caption Competition, the following risk factors should be considered
carefully in evaluating us and our business. This Annual Report on Form 10-K contains
forward-looking statements within the meaning of the federal securities laws. Actual results and
the timing of events could differ materially from those projected in forward-looking statements due
to a number of factors, including those set forth below and elsewhere in this Annual Report on Form
10-K. See Special Note Regarding Forward-Looking Statements.
 Our business and our financial condition have been adversely affected by general economic
conditions.
  Demand for our service is difficult to predict.
  Failure of third parties to perform could adversely affect our business.
  
    
    manufacturers that build and distribute satellite radios;
 
    
    companies that manufacture and sell integrated circuits for satellite radios;
 
    
    programming providers and on-air talent, including Howard Stern;
 
    
    retailers that market and sell satellite radios and promote subscriptions to
our services; and
 
    
    vendors that have designed or built, and vendors that support or operate,
important elements of our systems, such as our satellites and customer service facilities.
   Programming is an important part of our service, and the costs to renew our programming
arrangements may be more than anticipated.
     12




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We must maintain and pay license fees for music rights.
   Higher than expected costs of attracting new subscribers, higher subscriber turnover or weaker than
expected advertising revenue could each adversely affect our financial performance and operating
results.
     We may from time to time modify our business plan, and these changes could adversely affect us and
our financial condition.
  Our substantial indebtedness could adversely affect our ability to raise additional capital to fund
our operations and could limit our ability to react to changes in the economy or our industry.
  
    
    increases our vulnerability to general adverse economic and industry
conditions;
 
    
    requires us to dedicate a substantial portion of our cash flow from operations
to payments on indebtedness, reducing the availability of cash flow to fund working
capital, capital expenditures and other general corporate activities;
 
    
    limits our ability to borrow additional funds or make capital expenditure;
 
    
    limits our flexibility in planning for, or reacting to, changes in our business
and the audio entertainment industry; and
 
    
    may place us at a competitive disadvantage compared to other competitors.
  13




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Our business might never become profitable.
  Our business depends in large part upon automakers, a number of whom have experienced a sharp
decline in sales, have reduced production and are experiencing extreme financial difficulties.
   Rapid technological and industry changes could adversely impact our services.
  Consumers could pirate our services.
  Failure of our satellites would significantly damage our business and potential satellite losses
may not be covered by insurance.
  
    
    degradation and durability of solar panels;
 
    
    quality of construction;
 
    
    random failure of satellite components, which could result in significant
damage to or loss of a satellite;
 
    
    amount of fuel the satellites consume; and
 
    
    damage or destruction by electrostatic storms or collisions with other objects
in space.
  14




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Our broadcast studios, terrestrial repeater networks, satellite uplink facilities or other ground
facilities could be damaged by natural catastrophes or terrorist activities.
   Electromagnetic interference from others could damage our business.
  Failure to comply with FCC requirements could damage our business.
   15




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Changes in consumer protection laws and their enforcement could damage our business.
   The unfavorable outcome of pending or future litigation could have a material adverse effect.
  Our business may be impaired by third-party intellectual property rights.
    16




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Liberty Media Corporation has significant influence over our business and affairs and its interests
may differ from ours.
  Our net operating loss carryforwards could be substantially limited if SIRIUS experiences an
ownership change as defined in the Internal Revenue Code.
      17




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ITEM 1B.
    
    UNRESOLVED STAFF COMMENTS
  
 ITEM 2.
    
    PROPERTIES
  Location
    
    Purpose
    
    Own/LeaseWashington, DC
    
    Office and studio/production facilities
    
    OwnWashington, DC
    
    Office facilities and data center
    
    OwnDeerfield Beach, FL
    
    Office and technical/engineering facilities
    
    LeaseNew York, NY
    
    Studio/production facilities @ Jazz at Lincoln Center
    
    LeaseNashville, TN
    
    Studio/production facility
    
    Lease
   
 ITEM 3.
    
    LEGAL PROCEEDINGS
 FCC Merger Order.
 Advanced Recording Functionality Disputes/Atlantic Recording Corporation, BMG Music, Capital
Records, Inc., Elektra Entertainment Group Inc., Interscope Records, Motown Record Company, L.P.,
Sony BMG Music Entertainment, UMG Recordings, Inc., Virgin Records, Inc. and Warner Bros. Records
Inc. v. XM Satellite Radio Inc.
   Other Matters
 
 ITEM 4.
    
    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
   18




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PART II
 
 ITEM 5.
    
    MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES
OF EQUITY SECURITIES
  
 ITEM 6.
    
    SELECTED FINANCIAL DATA
  Successor Entity
    
    
    
    Predecessor EntityYear Ended
    
    
    August 1, 2008
    
    
    
    January 1, 2008
    
    
    Year Ended
    
    
    Year Ended
    
    
    Year EndedDecember 31,
    
    
    Through December 31,
    
    
    
    Through July 31,
    
    
    December 31,
    
    
    December 31,
    
    
    December 31,(in thousands)
    
    2009
    
    
    2008
    
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005Statements of Operations Data:Total revenue
    
    $
    1,297,341
    
    
    $
    511,154
    
    
    
    $
    731,194
    
    
    $
    1,136,542
    
    
    $
    933,417
    
    
    $
    558,266Net loss
    
    
    (246,830
    )
    
    
    (6,438,185
    )
    
    
    
    (322,458
    )
    
    
    (682,381
    )
    
    
    (718,872
    )
    
    
    (666,715
    )
 Successor Entity
    
    
    
    Predecessor EntityAs of December 31,
    
    
    
    As of December 31,(in thousands)
    
    2009
    
    
    2008
    
    
    
    2007
    
    
    2006
    
    
    2005Balance Sheet Data:Cash and cash equivalents
    
    $
    212,155
    
    
    $
    206,740
    
    
    
    $
    156,686
    
    
    $
    218,216
    
    
    $
    710,991Restricted investments
    
    
    250
    
    
    
    120,250
    
    
    
    
    275
    
    
    
    2,098
    
    
    
    5,488Total assets
    
    
    4,076,508
    
    
    
    4,311,279
    
    
    
    
    1,609,230
    
    
    
    1,840,618
    
    
    
    2,223,661Long-term debt, net of current portion
    
    
    1,659,532
    
    
    
    1,413,596
    
    
    
    
    1,480,639
    
    
    
    1,286,179
    
    
    
    1,035,584Stockholders (deficit) equity (1)
    
    
    (701,896
    )
    
    
    (575,554
    )
    
    
    
    (984,303
    )
    
    
    (397,880
    )
    
    
    80,948
 
 (1)
    
    No cash dividends were declared or paid in any of the periods presented.  19




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ITEM 7.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 This Annual Report on Form 10-K contains forward-looking statements within the meaning of the
federal securities laws. Actual results and the timing of events could differ materially from those
projected in forward-looking statements due to a number of factors, including those described under
Item 1A  Risk Factors and elsewhere in this Annual Report. See Explanatory Note and Special
Note Regarding Forward-Looking Statements.
 (All dollar amounts referenced in this Item 7 are in thousands, unless otherwise stated.)
 Executive Summary
        Unaudited Actual and Pro Forma Information
   20




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Unaudited Actual and Pro Forma Subscribers and Metrics.
 UnauditedFor the Three Months
Ended December 31,2009
    
    
    2008Beginning subscribers
    
    
    9,704,886
    
    
    
    9,896,072Gross subscriber additions
    
    
    895,199
    
    
    
    794,809Deactivated subscribers
    
    
    (850,985
    )
    
    
    (840,140
    )Net additions
    
    
    44,214
    
    
    
    (45,331
    )Ending subscribers
    
    
    9,749,100
    
    
    
    9,850,741Retail
    
    
    3,659,504
    
    
    
    4,319,632OEM
    
    
    5,988,148
    
    
    
    5,442,724Rental
    
    
    101,448
    
    
    
    88,385Ending subscribers
    
    
    9,749,100
    
    
    
    9,850,741Retail
    
    
    (118,142
    )
    
    
    (99,114
    )OEM
    
    
    147,511
    
    
    
    54,873Rental
    
    
    14,845
    
    
    
    (1,090
    )Net additions
    
    
    44,214
    
    
    
    (45,331
    )Self-pay
    
    
    9,040,022
    
    
    
    9,095,579Paid promotional
    
    
    709,078
    
    
    
    755,162Ending subscribers
    
    
    9,749,100
    
    
    
    9,850,741Self-pay
    
    
    142,540
    
    
    
    178,879Paid promotional
    
    
    (98,326
    )
    
    
    (224,210
    )Net additions
    
    
    44,214
    
    
    
    (45,331
    )Daily weighted average number of subscribers
    
    
    9,703,031
    
    
    
    9,825,521
 UnauditedFor the Three Months Ended December 31,2009
    
    
    2008Average self-pay monthly churn (1)(7)
    
    
    2.0
    %
    
    
    1.8
    %Conversion rate (2)(7)
    
    
    47.5
    %
    
    
    47.4
    %ARPU (3)(7)
    
    $
    10.94
    
    
    $
    10.67SAC, as adjusted, per gross subscriber addition (4)(7)
    
    $
    57
    
    
    $
    61Customer service and billing expenses, as adjusted,
per average 
subscriber (5)(7)
    
    $
    1.11
    
    
    $
    1.20Total revenue
    
    $
    370,408
    
    
    $
    337,476Free cash flow (6)(7)
    
    $
    29,561
    
    
    $
    (3,918
    )Adjusted income (loss) from operations (8)
    
    $
    82,360
    
    
    $
    25,657Net loss
    
    $
    (4,686
    )
    
    $
    (88,998
    )
 
  Subscribers.
  21




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ARPU.
 SAC, As Adjusted, Per Gross Subscriber Addition.
 Customer Service and Billing Expenses, As Adjusted, Per Average Subscriber.
 Adjusted Income (Loss) from Operations.
  22




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UnauditedFor the Years Ended December 31,2009
    
    
    2008Beginning subscribers
    
    
    9,850,741
    
    
    
    9,026,837Gross subscriber additions
    
    
    3,184,559
    
    
    
    3,956,653Deactivated subscribers
    
    
    (3,286,200
    )
    
    
    (3,132,749
    )Net additions
    
    
    (101,641
    )
    
    
    823,904Ending subscribers
    
    
    9,749,100
    
    
    
    9,850,741Retail
    
    
    3,659,504
    
    
    
    4,319,632OEM
    
    
    5,988,148
    
    
    
    5,442,724Rental
    
    
    101,448
    
    
    
    88,385Ending subscribers
    
    
    9,749,100
    
    
    
    9,850,741Retail
    
    
    (660,128
    )
    
    
    (278,374
    )OEM
    
    
    545,424
    
    
    
    1,075,088Rental
    
    
    13,063
    
    
    
    27,190Net additions
    
    
    (101,641
    )
    
    
    823,904Self-pay
    
    
    9,040,022
    
    
    
    9,095,579Paid promotional
    
    
    709,078
    
    
    
    755,162Ending subscribers
    
    
    9,749,100
    
    
    
    9,850,741Self-pay
    
    
    (55,557
    )
    
    
    907,297Paid promotional
    
    
    (46,084
    )
    
    
    (83,393
    )Net additions
    
    
    (101,641
    )
    
    
    823,904Daily weighted average number of subscribers
    
    
    9,687,489
    
    
    
    9,572,997
 UnauditedFor the Years Ended December 31,2009
    
    
    2008Average self-pay monthly churn (1)(7)
    
    
    2.0
    %
    
    
    1.7
    %Conversion rate (2)(7)
    
    
    47.6
    %
    
    
    50.7
    %ARPU (7)(10)
    
    $
    10.81
    
    
    $
    10.57SAC, as adjusted, per gross subscriber addition (7)(11)
    
    $
    54
    
    
    $
    68Customer service and billing expenses, as adjusted,
per average subscriber (7)(12)
    
    $
    1.10
    
    
    $
    1.22Total revenue
    
    $
    1,351,406
    
    
    $
    1,283,902Free cash flow (7)(13)
    
    $
    219,368
    
    
    $
    (288,112
    )Adjusted income (loss) from operations (14)
    
    $
    273,544
    
    
    $
    (78,822
    )Net loss
    
    $
    (247,712
    )
    
    $
    (480,796
    )
 
  Subscribers.
 ARPU.
  23




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##### Table of Contents



SAC, As Adjusted, Per Gross Subscriber Addition.
 Customer Service and Billing Expenses, As Adjusted, Per Average Subscriber.
 Adjusted Income (Loss) from Operations.
 Unaudited Pro Forma Results of Operations.
 Unaudited Pro FormaFor the Three Months Ended December 31,(in thousands)
    
    2009
    
    
    2008Revenue:Subscriber revenue, including effects of rebates
    
    $
    313,158
    
    
    $
    309,523Advertising revenue, net of agency fees
    
    
    5,232
    
    
    
    4,845Equipment revenue
    
    
    11,892
    
    
    
    15,640Other revenue
    
    
    40,126
    
    
    
    7,468Total revenue
    
    
    370,408
    
    
    
    337,476Operating expenses:Satellite and transmission
    
    
    13,413
    
    
    
    16,401Programming and content
    
    
    40,469
    
    
    
    49,057Revenue share and royalties
    
    
    68,530
    
    
    
    72,087Customer service and billing
    
    
    32,227
    
    
    
    35,450Cost of equipment
    
    
    4,126
    
    
    
    7,279Sales and marketing
    
    
    47,245
    
    
    
    49,301Subscriber acquisition costs
    
    
    58,726
    
    
    
    56,602General and administrative
    
    
    19,348
    
    
    
    20,256Engineering, design and development
    
    
    3,964
    
    
    
    5,386Depreciation and amortization
    
    
    25,042
    
    
    
    26,251Share-based payment expense
    
    
    4,209
    
    
    
    13,321Restructuring, impairments and related costs
    
    
    2,640
    
    
    
    Total operating expenses
    
    
    319,939
    
    
    
    351,391Income (loss) from operations
    
    
    50,469
    
    
    
    (13,915
    )Other expense
    
    
    (54,426
    )
    
    
    (74,792
    )Loss before income taxes
    
    
    (3,957
    )
    
    
    (88,707
    )Income tax expense
    
    
    (729
    )
    
    
    (291
    )Net loss
    
    
    (4,686
    )
    
    
    (88,998
    )Add: net loss attributable to noncontrolling interests
    
    
    
    
    
    
    Net loss  XM Satellite Radio Holdings Inc.
and Subsidiaries
    
    $
    (4,686
    )
    
    $
    (88,998
    )
  24




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Highlights for the Three Months Ended December 31, 2009
       25




---



##### Table of Contents



Unaudited Pro FormaFor the Years Ended December 31,(in thousands)
    
    2009
    
    
    2008Revenue:Subscriber revenue, including effects of rebates
    
    $
    1,238,217
    
    
    $
    1,181,860Advertising revenue, net of agency fees
    
    
    18,708
    
    
    
    32,753Equipment revenue
    
    
    29,574
    
    
    
    32,388Other revenue
    
    
    64,907
    
    
    
    36,901Total revenue
    
    
    1,351,406
    
    
    
    1,283,902Operating expenses:Satellite and transmission
    
    
    49,954
    
    
    
    72,712Programming and content
    
    
    175,661
    
    
    
    192,066Revenue share and royalties
    
    
    277,135
    
    
    
    288,242Customer service and billing
    
    
    127,317
    
    
    
    140,015Cost of equipment
    
    
    16,175
    
    
    
    32,312Sales and marketing
    
    
    137,420
    
    
    
    197,936Subscriber acquisition costs
    
    
    185,559
    
    
    
    270,662General and administrative
    
    
    89,916
    
    
    
    140,715Engineering, design and development
    
    
    18,725
    
    
    
    28,064Depreciation and amortization
    
    
    85,476
    
    
    
    136,129Share-based payment expense
    
    
    40,496
    
    
    
    55,188Restructuring, impairments and related costs
    
    
    32,254
    
    
    
    Total operating expenses
    
    
    1,236,088
    
    
    
    1,554,041Income (loss) from operations
    
    
    115,318
    
    
    
    (270,139
    )Other expense
    
    
    (360,567
    )
    
    
    (200,739
    )Loss before income taxes
    
    
    (245,249
    )
    
    
    (470,878
    )Income tax (expense) benefit
    
    
    (2,463
    )
    
    
    (2,475
    )Net loss
    
    
    (247,712
    )
    
    
    (473,353
    )Add: net loss attributable to noncontrolling interests
    
    
    
    
    
    
    (7,443
    )Net loss  XM Satellite Radio Holdings Inc.
and Subsidiaries
    
    $
    (247,712
    )
    
    $
    (480,796
    )
 Highlights for the Year Ended December 31, 2009
   26




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Unaudited Actual Results of Operations
  Unaudited Actual Subscribers and Metrics.
  27




---



##### Table of Contents



UnauditedFor the Three Months Ended December 31,2009
    
    
    2008Beginning subscribers
    
    
    9,704,886
    
    
    
    9,896,072Gross subscriber additions
    
    
    895,199
    
    
    
    794,809Deactivated subscribers
    
    
    (850,985
    )
    
    
    (840,140
    )Net additions
    
    
    44,214
    
    
    
    (45,331
    )Ending subscribers
    
    
    9,749,100
    
    
    
    9,850,741Retail
    
    
    3,659,504
    
    
    
    4,319,632OEM
    
    
    5,988,148
    
    
    
    5,442,724Rental
    
    
    101,448
    
    
    
    88,385Ending subscribers
    
    
    9,749,100
    
    
    
    9,850,741Retail
    
    
    (118,142
    )
    
    
    (99,114
    )OEM
    
    
    147,511
    
    
    
    54,873Rental
    
    
    14,845
    
    
    
    (1,090
    )Net additions
    
    
    44,214
    
    
    
    (45,331
    )Self-pay
    
    
    9,040,022
    
    
    
    9,095,579Paid promotional
    
    
    709,078
    
    
    
    755,162Ending subscribers
    
    
    9,749,100
    
    
    
    9,850,741Self-pay
    
    
    142,540
    
    
    
    178,879Paid promotional
    
    
    (98,326
    )
    
    
    (224,210
    )Net additions
    
    
    44,214
    
    
    
    (45,331
    )Daily weighted average number of subscribers
    
    
    9,703,031
    
    
    
    9,825,521
 UnauditedFor the Three Months Ended December 31,2009
    
    
    2008Average self-pay monthly churn (1)(7)
    
    
    2.0
    %
    
    
    1.8
    %Conversion rate (2)(7)
    
    
    47.5
    %
    
    
    47.4
    %ARPU (7)(16)
    
    $
    10.74
    
    
    $
    9.98SAC, as adjusted, per gross subscriber addition (7)(17)
    
    $
    37
    
    
    $
    37Customer service and billing expenses, as adjusted,
per average 
subscriber (7)(18)
    
    $
    1.11
    
    
    $
    1.20Total revenue
    
    $
    362,802
    
    
    $
    315,551Free cash flow (7)(19)
    
    $
    29,561
    
    
    $
    (3,918
    )Adjusted income (loss) from operations (20)
    
    $
    137,587
    
    
    $
    66,015Net loss
    
    $
    98,301
    
    
    $
    (1,584,162
    )
 
 Note: See pages 43 through 56 for footnotes. Subscribers.
  28




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ARPU.
  SAC, As Adjusted, Per Gross Subscriber Addition.
  Customer Service and Billing Expenses, As Adjusted, Per Average Subscriber.
  Adjusted Income (Loss) from Operations.
 UnauditedFor the Years Ended December 31,2009
    
    
    2008
    
    
    2007Beginning subscribers
    
    
    9,850,741
    
    
    
    9,026,837
    
    
    
    7,628,552Gross subscriber additions
    
    
    3,184,559
    
    
    
    3,956,653
    
    
    
    3,893,773Deactivated subscribers
    
    
    (3,286,200
    )
    
    
    (3,132,749
    )
    
    
    (2,495,488
    )Net additions
    
    
    (101,641
    )
    
    
    823,904
    
    
    
    1,398,285Ending subscribers
    
    
    9,749,100
    
    
    
    9,850,741
    
    
    
    9,026,837Retail
    
    
    3,659,504
    
    
    
    4,319,632
    
    
    
    4,598,006OEM
    
    
    5,988,148
    
    
    
    5,442,724
    
    
    
    4,367,636Rental
    
    
    101,448
    
    
    
    88,385
    
    
    
    61,195Ending subscribers
    
    
    9,749,100
    
    
    
    9,850,741
    
    
    
    9,026,837Retail
    
    
    (660,128
    )
    
    
    (278,374
    )
    
    
    192,560OEM
    
    
    545,424
    
    
    
    1,075,088
    
    
    
    1,154,100Rental
    
    
    13,063
    
    
    
    27,190
    
    
    
    51,625Net additions
    
    
    (101,641
    )
    
    
    823,904
    
    
    
    1,398,285Self-pay
    
    
    9,040,022
    
    
    
    9,095,579
    
    
    
    8,188,282Paid promotional
    
    
    709,078
    
    
    
    755,162
    
    
    
    838,555Ending subscribers
    
    
    9,749,100
    
    
    
    9,850,741
    
    
    
    9,026,837Self-pay
    
    
    (55,557
    )
    
    
    907,297
    
    
    
    1,120,258Paid promotional
    
    
    (46,084
    )
    
    
    (83,393
    )
    
    
    278,027Net additions
    
    
    (101,641
    )
    
    
    823,904
    
    
    
    1,398,285Daily weighted average number of subscribers
    
    
    9,687,489
    
    
    
    9,572,997
    
    
    
    8,256,659
  29




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##### Table of Contents



UnauditedFor the Years Ended December 31,2009
    
    
    2008
    
    
    2007Average self-pay monthly churn (1)(7)
    
    
    2.0
    %
    
    
    1.7
    %
    
    
    1.8
    %Conversion rate (2)(7)
    
    
    47.6
    %
    
    
    50.7
    %
    
    
    52.7
    %ARPU (7)(21)
    
    $
    10.41
    
    
    $
    10.24
    
    
    $
    10.83SAC, as adjusted, per gross subscriber addition (7)(22)
    
    $
    35
    
    
    $
    60
    
    
    $
    73Customer service and billing expenses, as adjusted,
per average 
subscriber (7)(23)
    
    $
    1.10
    
    
    $
    1.22
    
    
    $
    1.25Total revenue
    
    $
    1,297,341
    
    
    $
    1,242,348
    
    
    $
    1,136,542Free cash flow (7)(24)
    
    $
    219,368
    
    
    $
    (288,112
    )
    
    $
    (286,245
    )Adjusted income (loss) from operations (25)
    
    $
    455,569
    
    
    $
    (18,727
    )
    
    $
    (238,042
    )Net loss
    
    $
    (246,830
    )
    
    $
    (6,760,643
    )
    
    $
    (682,381
    )
 Subscribers.
  ARPU.
   SAC, As Adjusted, Per Gross Subscriber Addition.
   Customer Service and Billing Expenses, As Adjusted, Per Average Subscriber.
   Adjusted Income (Loss) from Operations.
  30




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Results of Operations
   31




---



##### Table of Contents



Unaudited ActualFor the Three Months Ended December 31,(in thousands)
    
    2009
    
    
    2008Revenue:Subscriber revenue, including effects of rebates
    
    $
    307,365
    
    
    $
    289,424Advertising revenue, net of agency fees
    
    
    5,232
    
    
    
    4,845Equipment revenue
    
    
    11,892
    
    
    
    15,640Other revenue
    
    
    38,313
    
    
    
    5,642Total revenue
    
    
    362,802
    
    
    
    315,551Operating expenses:Satellite and transmission
    
    
    13,498
    
    
    
    17,394Programming and content
    
    
    22,505
    
    
    
    29,575Revenue share and royalties
    
    
    44,358
    
    
    
    52,593Customer service and billing
    
    
    32,551
    
    
    
    35,948Cost of equipment
    
    
    4,126
    
    
    
    7,279Sales and marketing
    
    
    43,782
    
    
    
    47,153Subscriber acquisition costs
    
    
    40,871
    
    
    
    37,383General and administrative
    
    
    21,807
    
    
    
    28,107Engineering, design and development
    
    
    4,873
    
    
    
    6,467Impairment of goodwill
    
    
    
    
    
    
    1,574,208Depreciation and amortization
    
    
    45,319
    
    
    
    59,690Restructuring, impairments and related costs
    
    
    2,640
    
    
    
    Total operating expenses
    
    
    276,330
    
    
    
    1,895,797Income (loss) from operations
    
    
    86,472
    
    
    
    (1,580,246
    )Other income (expense)Interest and investment income
    
    
    789
    
    
    
    (667
    )Interest expense, net of amounts capitalized
    
    
    (62,910
    )
    
    
    (59,357
    )Gain (loss) on change in value of embedded derivatives
    
    
    78,169
    
    
    
    80,124Loss on extinguishment of debt and credit facilities, net
    
    
    (4,021
    )
    
    
    Loss on investments
    
    
    (366
    )
    
    
    (22,673
    )Other income (expense)
    
    
    897
    
    
    
    (1,052
    )Total other income (expense)
    
    
    12,558
    
    
    
    (3,625
    )Income (loss) before income taxes
    
    
    99,030
    
    
    
    (1,583,871
    )Income tax expense
    
    
    (729
    )
    
    
    (291
    )Net income (loss)
    
    
    98,301
    
    
    
    (1,584,162
    )Add: net loss attributable to noncontrolling interests
    
    
    
    
    
    
    Net income (loss)  XM Satellite Radio Holdings Inc.
and Subsidiaries
    
    $
    98,301
    
    
    $
    (1,584,162
    )Satellite and transmission
    
    $
    306
    
    
    $
    712Programming and content
    
    
    (758
    )
    
    
    1,191Customer service and billing
    
    
    324
    
    
    
    499Sales and marketing
    
    
    (84
    )
    
    
    1,030Subscriber acquisition costs
    
    
    
    
    
    
    General and administrative
    
    
    2,459
    
    
    
    7,851Engineering, design and development
    
    
    909
    
    
    
    1,080Total share-based payment expense
    
    $
    3,156
    
    
    $
    12,363
 Highlights for the Three Months Ended December 31, 2009
  32




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33




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##### Table of Contents



ActualFor the Years Ended December 31,(in thousands)
    
    2009
    
    
    2008
    
    
    2007Revenue:Subscriber revenue, including effects of rebates
    
    $
    1,191,403
    
    
    $
    1,143,327
    
    
    $
    1,033,776Advertising revenue, net of agency fees
    
    
    18,708
    
    
    
    32,753
    
    
    
    39,148Equipment revenue
    
    
    29,574
    
    
    
    32,388
    
    
    
    28,333Other revenue
    
    
    57,656
    
    
    
    33,880
    
    
    
    35,285Total revenue
    
    
    1,297,341
    
    
    
    1,242,348
    
    
    
    1,136,542Operating expenses:Satellite and transmission
    
    
    50,450
    
    
    
    76,418
    
    
    
    81,036Programming and content
    
    
    106,858
    
    
    
    164,777
    
    
    
    183,900Revenue share and royalties
    
    
    187,355
    
    
    
    257,738
    
    
    
    256,344Customer service and billing
    
    
    128,719
    
    
    
    142,714
    
    
    
    126,776Cost of equipment
    
    
    16,175
    
    
    
    32,312
    
    
    
    62,003Sales and marketing
    
    
    128,347
    
    
    
    202,158
    
    
    
    269,930Subscriber acquisition costs
    
    
    124,395
    
    
    
    238,948
    
    
    
    259,143General and administrative
    
    
    113,497
    
    
    
    163,766
    
    
    
    188,574Engineering, design and development
    
    
    21,671
    
    
    
    34,703
    
    
    
    33,077Impairment of goodwill
    
    
    
    
    
    
    6,601,046
    
    
    
    Depreciation and amortization
    
    
    191,781
    
    
    
    183,059
    
    
    
    187,196Restructuring, impairments and related costs
    
    
    32,254
    
    
    
    
    
    
    
    Total operating expenses
    
    
    1,101,502
    
    
    
    8,097,639
    
    
    
    1,647,979Income (loss) from operations
    
    
    195,839
    
    
    
    (6,855,291
    )
    
    
    (511,437
    )Other income (expense)Interest and investment income
    
    
    2,637
    
    
    
    6,309
    
    
    
    14,084Interest expense, net of amounts capitalized
    
    
    (289,845
    )
    
    
    (181,092
    )
    
    
    (116,605
    )Gain (loss) on change in value of embedded derivatives
    
    
    (33,534
    )
    
    
    322,347
    
    
    
    Loss on extinguishment of debt and credit facilities, net
    
    
    (115,884
    )
    
    
    
    
    
    
    (3,693
    )Loss on investments
    
    
    (7,026
    )
    
    
    (38,772
    )
    
    
    (56,156
    )Other income (expense)
    
    
    3,446
    
    
    
    (4,226
    )
    
    
    2,019Total other (expense) income
    
    
    (440,206
    )
    
    
    104,566
    
    
    
    (160,351
    )Loss before income taxes
    
    
    (244,367
    )
    
    
    (6,750,725
    )
    
    
    (671,788
    )Income tax (expense) benefit
    
    
    (2,463
    )
    
    
    (2,475
    )
    
    
    939Net loss
    
    
    (246,830
    )
    
    
    (6,753,200
    )
    
    
    (670,849
    )Add: net loss attributable to noncontrolling interests
    
    
    
    
    
    
    (7,443
    )
    
    
    (11,532
    )Net loss  XM Satellite Radio Holdings Inc.
and Subsidiaries
    
    $
    (246,830
    )
    
    $
    (6,760,643
    )
    
    $
    (682,381
    )
  34




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##### Table of Contents



Year Ended December 31, 2009 Compared with Year Ended December 31, 2008 and Year Ended December 31,
2008 Compared with Year Ended December 31, 2007
 Total Revenue
 Subscriber Revenue
 
    
    2009 vs. 2008: For the years ended December 31, 2009 and 2008, subscriber revenue was
$1,191,403 and $1,143,327, respectively, an increase of 4%, or $48,076. The increase was
attributable to the sale of Best of programming, increased internet and
multi-subscription rates and higher average subscribers, offset partially by the effect
from purchase price accounting adjustments.
 
    
    2008 vs. 2007:For the years ended December 31, 2008 and 2007, subscriber revenue was
$1,143,327 and $1,033,776, respectively, an increase of 11%, or $109,551. The increase was
attributable to the 9% growth of subscribers to our service in 2008.
  Successor Entity
    
    
    
    Predecessor EntityAugust 1, 2008
    
    
    
    January 1, 2008Year Ended
    
    
    Through
    
    
    
    Through
    
    
    Year EndedDecember 31,
    
    
    December 31,
    
    
    
    July 31,
    
    
    December 31,2009
    
    
    2008
    
    
    
    2008
    
    
    2007Subscription fees
    
    $
    1,188,195
    
    
    $
    472,800
    
    
    
    $
    659,775
    
    
    $
    1,016,720Activation fees
    
    
    3,488
    
    
    
    319
    
    
    
    
    11,855
    
    
    
    19,354Effect of rebates
    
    
    (280
    )
    
    
    (662
    )
    
    
    
    (760
    )
    
    
    (2,298
    )Total subscriber revenue
    
    $
    1,191,403
    
    
    $
    472,457
    
    
    
    $
    670,870
    
    
    $
    1,033,776
  Advertising Revenue.
 
    
    2009 vs. 2008: For the years ended December 31, 2009 and 2008, net advertising revenue
was $18,708 and $32,753, respectively, which represents a decrease of 43%, or $14,045. The
decrease was driven by the current economic environment.
 
    
    2008 vs. 2007:For the years ended December 31, 2008 and 2007, net advertising revenue
was $32,753 and $39,148, respectively, which represents a decrease of 16%, or $6,395. The
decrease was driven by lower advertising spot sales compared to 2007.
  Equipment Revenue.
 
    
    2009 vs. 2008: For the years ended December 31, 2009 and 2008, equipment revenue was
$29,574 and $32,388, respectively, a decrease of 9%, or $2,814. The decrease was primarily
due to a decrease in the number of radios sold through our direct to consumer distribution
channel and fewer component sales.
 
    
    2008 vs. 2007:For the years ended December 31, 2008 and 2007, equipment revenue was
$32,388 and $28,333, respectively, an increase of 14%, or $4,055. The increase was
primarily due to an increase in royalties partially offset by a decrease in the number of
radios sold through our direct to consumer distribution channel.
  Other Revenue.
  35




---



##### Table of Contents




    
    2009 vs. 2008: For the years ended December 31, 2009 and 2008, other revenue was $57,656
and $33,880, respectively, an increase of 70%, or $23,776. The increase was primarily due
to the U.S. Music Royalty Fee introduced in the third quarter of 2009.
 
    
    2008 vs. 2007: For the years ended December 31, 2008 and 2007, other revenue was $33,880
and $35,285, respectively, a decrease of 4%, or $1,405.
  Operating Expenses
 Satellite and Transmission.
 
    
    2009 vs. 2008: For the years ended December 31, 2009 and 2008, satellite and
transmission expenses were $50,450 and $76,418, respectively, a decrease of 34%, or
$25,968. The decrease was primarily due to lower maintenance and repeater network expenses
as well as lower personnel costs.
 
    
    2008 vs. 2007:For the years ended December 31, 2008 and 2007, satellite and
transmission expenses were $76,418 and $81,036, respectively, a decrease of 6%, or $4,618.
As of December 31, 2008 and 2007, we had over 700 terrestrial repeaters in operation.
Satellite and transmission expense decreased compared to December 31, 2007 primarily as a
result of decreased terrestrial repeater network costs.
  Programming and Content.
 
    
    2009 vs. 2008: For the years ended December 31, 2009 and 2008, programming and content
expenses were $106,858 and $164,777, respectively, a decrease of 35%, or $57,919. The
decrease was primarily attributable to the lower costs recognized subsequent to the Merger
due to the impact of purchase price accounting adjustments, reductions in personnel and
on-air talent costs, as well as savings on various content agreements.
 
    
    2008 vs. 2007:For the years ended December 31, 2008 and 2007, programming and content
expenses were $164,777 and $183,900, respectively, a decrease of 10%, or $19,123. The
decrease was primarily attributable to the lower costs recognized subsequent to the Merger
due to the impact of purchase price accounting adjustments.
 .
 Revenue Share and Royalties.
 
    
    2009 vs. 2008: For the years ended December 31, 2009 and 2008, revenue share and
royalties were $187,355 and $257,738, respectively, a decrease of 27% or $70,383. This
decrease was primarily attributable to the effect of purchase price accounting, offset by
an increase in our revenues and an increase in the statutory royalty rate due for the
performance of sound recordings.
 
    
    2008 vs. 2007:For the years ended December 31, 2008 and 2007, revenue share and
royalties were $257,738 and $256,344, respectively, an increase of 1%, or $1,394. This
increase was primarily attributable to the determination of the royalty rate under the
statutory license covering the performance of sound recordings by the Copyright Royalty
Board; and a 11% growth in our subscription revenue.
  Customer Service and Billing.
 
    
    2009 vs. 2008: For the years ended December 31, 2009 and 2008, customer service and
billing expenses were $128,719 and $142,714, respectively, a decrease of 10%, or $13,995.
The decrease was primarily due to decreases in personnel costs and customer call center
expenses.
 
    
    2008 vs. 2007:For the years ended December 31, 2008 and 2007, customer service and
billing expenses were $142,714 and $126,776, respectively, an increase of 13%, or $15,938.
This increase was primarily due to higher call center operating costs necessary to
accommodate the increase in our subscriber base and higher total transaction fees on the
larger customer base.
  36




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##### Table of Contents



Cost of Equipment.
 
    
    2009 vs. 2008: For the years ended December 31, 2009 and 2008, cost of equipment was
$16,175 and $32,312, respectively, a decrease of 50%, or $16,137. The decrease was
primarily attributed to fewer radios sold through our direct to consumer distribution
channel, lower inventory related charges for obsolescence, and lower component sales.
 
    
    2008 vs. 2007:For the years ended December 31, 2008 and 2007, cost of equipment was
$32,312 and $62,003, respectively, a decrease of 48%, or $29,691. The decrease was
primarily attributed to fewer radios sold through our direct to consumer distribution
channel and lower inventory related charges for obsolescence.
  Sales and Marketing.
 
    
    2009 vs. 2008: For the years ended December 31, 2009 and 2008, sales and marketing
expenses were $128,347 and $202,158, respectively, a decrease of 37%, or $73,811. This
decrease was primarily attributable to lower consumer advertising, reduced cooperative
marketing spend with our distributors, reduced personnel costs and the effect of purchase
price accounting.
 
    
    2008 vs. 2007:For the years ended December 31, 2008 and 2007, sales and marketing
expenses were $202,158 and $269,930, respectively, a decrease of 25%, or $67,772. This
decrease was primarily attributable to lower consumer advertising and reduced cooperative
marketing spend with our distributors.
  Subscriber Acquisition Costs.
 
    
    2009 vs. 2008: For the years ended December 31, 2009 and 2008, subscriber acquisition
costs were $124,395 and $238,948, respectively, a decrease of 48%, or $114,553. This
decrease was primarily driven by purchase price accounting adjustments associated with the
Merger, lower aftermarket inventory charges, lower retail and OEM subsidies due to better
product economics and fewer OEM installations due to the weakening automotive market.
 
    
    2008 vs. 2007:For the years ended December 31, 2008 and 2007, subscriber acquisition
costs were $238,948 and $259,143, respectively, a decrease of 8%, or $20,195. This decrease
was primarily driven by purchase price accounting adjustments associated with the Merger,
along with lower retail and OEM subsidies due to better product economics.
   37




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##### Table of Contents



General and Administrative.
 
    
    2009 vs. 2008: For the years ended December 31, 2009 and 2008, general and
administrative expenses were $113,497 and $163,766, respectively, a decrease of 31%, or
$50,269. This decrease was the result of lower costs for certain Merger, litigation and
regulatory matters.
 
    
    2008 vs. 2007:For the years ended December 31, 2008 and 2007, general and
administrative expenses were $163,766 and $188,574, respectively, a decrease of 13% or
$24,808. This decrease was the result of increased costs in 2007, including increased
compensation costs and increased legal fees associated with regulatory inquiries.
  Engineering, Design and Development.
 
    
    2009 vs. 2008: For the years ended December 31, 2009 and 2008, engineering, design and
development expenses were $21,671 and $34,703, respectively, a decrease of 38%, or $13,032.
This decrease was primarily attributable to reduced development, tooling and testing of
radios as well as lower personnel costs.
 
    
    2008 vs. 2007:For the years ended December 31, 2008 and 2007, engineering, design and
development expenses were $34,703 and $33,077, respectively, an increase of 5%, or $1,626.
This increase was primarily attributable to increased OEM and product development costs.
  Other Income (Expense)
 Interest and Investment Income.
 
    
    2009 vs. 2008: For the years ended December 31, 2009 and 2008, interest and investment
income was $2,637 and $6,309, respectively, a decrease of 58%, or $3,672. The decrease was
primarily attributable to a lower average cash balance and lower interest rates in 2009.
 
    
    2008 vs. 2007:For the years ended December 31, 2008 and 2007, interest and investment
income was $6,309 and $14,084, respectively, a decrease of 55%, or $7,775. The decrease was
primarily attributable to lower interest rates in 2008 and a lower cash balance.
 Interest Expense.
 
    
    2009 vs. 2008: For the years ended December 31, 2009 and 2008, interest expense was
$289,845 and $181,092, respectively, an increase of 60%, or $108,753. Interest expense
increased significantly due to the additional debt issuances in July and August 2008 as a
result of the Merger, the financing transactions in February and March 2009, and the impact
of the purchase price adjustments which set the existing debt at fair value and caused
interest expense to increase.
 
    
    2008 vs. 2007:For the years ended December 31, 2008 and 2007, interest expense was
$181,092 and $116,605, respectively, an increase of 55%, or $64,487. Interest expense
increased significantly due to the additional debt issuances in July and August 2008 as a
result of the Merger, as well as the impact of the purchase price adjustments which set the
existing debt at fair value and caused interest expense to increase. The increase in our
interest expense was partially offset by the capitalized interest associated with satellite
construction and the related launch vehicle.
   38




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##### Table of Contents



Gain (loss) on change in value of embedded derivative.
 
    
    2009 vs. 2008: For the year ended December 31, 2009, we recorded a loss on change in
value of embedded derivative of $33,534, and for the year ended December 31, 2008, we
recorded a gain on change in value of embedded derivative of $322,347. As a result of the
Merger, we recorded derivative liabilities reflecting the fair value of the embedded
derivative as of the Merger date. Subsequent to July 28, 2008, the SIRIUS stock price
decreased significantly resulting in a decreased fair value and a gain on the change in
value of the derivative. During the year ended December 31, 2009, the SIRIUS stock price
increased resulting in an increased fair value and a loss on the change in value of the
derivative.
 
    
    2008 vs. 2007:For the year ended December 31, 2008, we recorded a gain on change in
value of embedded derivative of $322,347. As a result of the Merger, we recorded derivative
liabilities reflecting the fair value of the embedded derivative as of the Merger date.
Subsequent to July 28, 2008, the SIRIUS stock price decreased significantly resulting in a
decreased fair value and a gain on the change in value of the derivative.
 Loss on extinguishment of debt and credit facilities, net.
 
    
    2009 vs. 2008: For the years ended December 31, 2009 and 2008, Loss on extinguishment of
debt and credit facilities, net was $115,884 and $0, respectively.
 
    
    2008 vs. 2007:For the years ended December 31, 2008 and 2007, Loss on extinguishment of
debt and credit facilities, net was $0 and $3,693, respectively.
 Gain (loss) on investments.
 
    
    2009 vs. 2008: For the years ended December 31, 2009 and 2008, loss on investments was
$7,026 and $38,772, respectively, a decrease of 82%, or $31,746. The decrease was primarily
attributable to the inclusion of our share of XM Canadas net income for the year ended
December 31, 2009, net of impairments versus our share of XM Canadas net loss for the year
ended December 31, 2008, net of impairments.
 
    
    2008 vs. 2007: For the years ended December 31, 2008 and 2007, loss on investments was
$38,772 and $56,156, respectively, a decrease of 31%, or $17,384.
 Income Taxes
 Income Tax Expense.
 
    
    2009 vs. 2008: For the years ended December 31, 2009 and 2008, income tax expense was
$2,463 and $2,475, respectively.
 
    
    2008 vs. 2007:For the years ended December 31, 2008 and 2007, income tax expense
(benefit) was $2,475 and ($939), respectively.
 Liquidity and Capital Resources
 Cash Flows for the Year Ended December 31, 2009 Compared with the Year Ended December 31, 2008 and
Year Ended December 31, 2008 Compared with the Year Ended December 31, 2007
   Successor Entity
    
    
    
    Predecessor Entity
    
    
    Combined
    
    
    Predecessor EntityYear Ended
    
    
    August 1, 2008
    
    
    
    January 1, 2008
    
    
    Year Ended
    
    
    Year EndedDecember 31,
    
    
    Through
    
    
    
    Through
    
    
    December 31,
    
    
    December 31,2009
    
    
    December 31, 2008
    
    
    
    July 31, 2008
    
    
    2008
    
    
    2007
    
    
    2009 vs. 2008
    
    
    2008 vs. 2007Net cash provided by (used in) operating activities
    
    $
    272,833
    
    
    $
    7,239
    
    
    
    $
    (251,086
    )
    
    $
    (243,847
    )
    
    $
    (154,730
    )
    
    $
    516,680
    
    
    $
    (89,117
    )Net cash (used in) provided by investing activities
    
    
    (53,465
    )
    
    
    11,953
    
    
    
    
    (65,668
    )
    
    
    (53,715
    )
    
    
    (131,515
    )
    
    
    250
    
    
    
    77,800Net cash (used in) provided by financing activities
    
    
    (213,953
    )
    
    
    (631,973
    )
    
    
    
    979,589
    
    
    
    347,616
    
    
    
    224,715
    
    
    
    (561,569
    )
    
    
    122,901Net increase (decrease) in cash and cash
equivalents
    
    
    5,415
    
    
    
    (612,781
    )
    
    
    
    662,835
    
    
    
    50,054
    
    
    
    (61,530
    )
    
    
    (44,639
    )
    
    
    111,584Cash and cash equivalents at beginning of period
    
    
    206,740
    
    
    
    819,521
    
    
    
    
    156,686
    
    
    
    156,686
    
    
    
    218,216
    
    
    
    50,054
    
    
    
    (61,530
    )Cash and cash equivalents at end of period
    
    $
    212,155
    
    
    $
    206,740
    
    
    
    $
    819,521
    
    
    $
    206,740
    
    
    $
    156,686
    
    
    $
    5,415
    
    
    $
    50,054
  39




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##### Table of Contents



Cash Flows Provided by (Used in) Operating Activities
 
    
    2009 vs. 2008: Net cash provided by operating activities increased $516,680 to $272,833
for the year ended December 31, 2009 from net cash used in operating activities of $243,847
for the year ended December 31, 2008. The increase was primarily the result of a decreased
net loss, net of non-cash operating activities of $283,606, and a decrease in cash used in
other operating assets and liabilities of $233,074.
 
    
    2008 vs. 2007:Net cash used in operating activities for the year ended December 31,
2008 was $243,847, consisting of a net loss of $6,760,643 adjusted for net non-cash
expenses of $6,536,177 and $19,381 used in working capital as well as other operating
activities. For the year ended December 31, 2007, the net cash used in operating activities
was $154,730. The increase in the net cash used in operating activities was primarily
attributable to a $120,000 escrow payment made to a programming partner during 2008.
 Cash Flows (Used in) Provided by Investing Activities
 
    
    2009 vs. 2008: Net cash used in investing activities decreased $250 to $53,465 for the
year ended December 31, 2009 from $53,715 for the year ended December 31, 2008.
 
    
    2008 vs. 2007:Net cash used in investing activities was $53,715, consisting of $44,290
in capital expenditures for the year ended December 31, 2008 compared with net cash used in
investing activities of $131,515 for the year ended December 31, 2007. The $77,800 decrease
was primarily a result of a decrease in capital expenditures of $89,048 offset by other
investing activities.
  Cash Flows (Used in) Provided by Financing Activities
 
    
    2009 vs. 2008: Net cash used in financing activities increased $561,569 to $213,953 for
the year ended December 31, 2009 from net cash provided by financing activities of $347,616
for the year ended December 31, 2008. The increase in cash used in financing activities was
primarily due to a decrease of $1,072,716 in net proceeds from the issuance of debt, offset
partially by a decrease in debt payment of $439,258 and a decrease of $68,777 in payments
to a noncontrolling interest.
 
    
    2008 vs. 2007:Net cash provided by financing activities was $347,616, consisting of
$1,554,933 of net proceeds from long-term borrowings offset partially by repayments of
long-term borrowings of $1,118,353 for the year ended December 31, 2008. Net cash provided
by financing activities was $224,715 for the year ended December 31, 2007. The increase of
$122,901 was primarily due to the proceeds received from Merger-related debt issuances
during July and August 2008, offset by debt extinguishments in August and September 2008.
 Financings and Capital Requirements
  Future Liquidity and Capital Resource Requirements
     40




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##### Table of Contents



Off-Balance Sheet Arrangements
   Contractual Cash Commitments
  Related Party Transactions
  Critical Accounting Policies and Estimates
  Fair Value of Assets Acquired and Liabilities Assumed.
 Long-Lived Assets
 .
 Useful Life of Broadcast/Transmission System
  41




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Revenue Recognition
        Income Taxes
  42




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Footnotes to Results of Operations
 (1)
    
    Average self-pay monthly churn represents the monthly average of self-pay deactivations by
the quarter divided by the average self-pay subscriber balance for the quarter.(2)
    
    We measure the percentage of vehicle owners and lessees that receive our service and convert
to self-paying after the initial promotion period. We refer to this as the conversion rate.
At the time of sale, vehicle owners and lessees generally receive a three month prepaid trial
subscription and we receive a subscription fee from the OEM. 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. Based on our experience it may take up to 90 days after the trial service ends for
vehicle owners and lessees to respond to our marketing communications and become self-paying
subscribers.(3)
    
    ARPU is derived from total earned subscriber revenue and net advertising revenue, divided by
the number of months in the period, divided by the daily weighted average number of
subscribers for the period. ARPU is calculated as follows (in thousands, except for subscriber
and per subscriber amounts): Unaudited Pro FormaFor the Three Months Ended December 31,2009
    
    
    2008Subscriber revenue
    
    $
    313,158
    
    
    $
    309,523Net advertising revenue
    
    
    5,232
    
    
    
    4,845Total subscriber and net advertising revenue
    
    $
    318,390
    
    
    $
    314,368Daily weighted average number of subscribers
    
    
    9,703,031
    
    
    
    9,825,521ARPU
    
    $
    10.94
    
    
    $
    10.67
 (4)
    
    SAC, as adjusted, per gross subscriber addition is derived from subscriber acquisition costs
and margins from the direct sale of radios and accessories, excluding share-based payment
expense, divided by the number of gross subscriber additions for the period. SAC, as adjusted,
per gross subscriber addition is calculated as follows (in thousands, except for subscriber
and per subscriber amounts): Unaudited Pro FormaFor the Three Months Ended December 31,2009
    
    
    2008Subscriber acquisition cost
    
    $
    58,726
    
    
    $
    56,602Less: share-based payment expense granted
to third parties and employees
    
    
    
    
    
    
    (Less) Add: margin from direct sales of radios
and accessories
    
    
    (7,766
    )
    
    
    (8,361
    )SAC, as adjusted
    
    $
    50,960
    
    
    $
    48,241Gross subscriber additions
    
    
    895,199
    
    
    
    794,809SAC, as adjusted, per gross subscriber
addition
    
    $
    57
    
    
    $
    61
  43




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##### Table of Contents



(5)
    
    Customer service and billing expenses, as adjusted, per average subscriber is derived
from total customer service and billing expenses, excluding share-based payment expense,
divided by the number of months in the period, divided by the daily weighted average number
of subscribers for the period. Customer service and billing expenses, as adjusted, per
average subscriber is calculated as follows (in thousands, except for subscriber and per
subscriber amounts): Unaudited Pro FormaFor the Three Months Ended December 31,2009
    
    
    2008Customer service and billing expenses
    
    $
    32,645
    
    
    $
    36,036Less: share-based payment expense
    
    
    (418
    )
    
    
    (586
    )Customer service and billing expenses, as
adjusted
    
    $
    32,227
    
    
    $
    35,450Daily weighted average number of subscribers
    
    
    9,703,031
    
    
    
    9,825,521Customer service and billing expenses, as
adjusted,
per average subscriber
    
    $
    1.11
    
    
    $
    1.20
 (6)
    
    Free cash flow is calculated as follows (in thousands): Unaudited Pro FormaFor the Three Months Ended December 31,2009
    
    
    2008Net cash provided by (used in)
operating activities
    
    $
    44,215
    
    
    $
    1,636Additions to property and equipment
    
    
    (14,654
    )
    
    
    (5,554
    )Restricted and other investment activity
    
    
    
    
    
    
    Free cash flow
    
    $
    29,561
    
    
    $
    (3,918
    )
 (7)
    
    Average self-pay monthly churn; conversion rate; ARPU; SAC, as adjusted, per gross subscriber
addition; customer service and billing expenses, as adjusted, per average subscriber; and free
cash flow are not measures of financial performance under GAAP. We believe these non-GAAP
financial measures provide meaningful supplemental information regarding our operating
performance and are used by us for budgetary and planning purposes; when publicly providing
our business outlook; as a means to evaluate period-to-period comparisons; and to compare our
performance to that of our competitors. We believe that investors also use our current and
projected metrics to monitor the performance of our business and to make investment decisions.We believe the exclusion of share-based payment expense in our calculations of SAC, as
adjusted, per gross subscriber addition and customer service and billing expenses, as adjusted,
per average subscriber is useful given the significant variation in expense that can result
from changes in the fair market value of SIRIUS common stock, the effect of which is unrelated
to the operational conditions that give rise to variations in the components of our subscriber
acquisition costs and customer service and billing expenses. Specifically, the exclusion of
share-based payment expense in our calculation of SAC, as adjusted, per gross subscriber
addition is critical in being able to understand the economic impact of the direct costs
incurred to acquire a subscriber and the effect over time as economies of scale are reached.These non-GAAP financial measures are used in addition to and in conjunction with results
presented in accordance with GAAP. These non-GAAP financial measures may be susceptible to
varying calculations; may not be comparable to other similarly titled measures of other
companies; and should not be considered in isolation, as a substitute for, or superior to
measures of financial performance prepared in accordance with GAAP.(8)
    
    We refer to net income (loss) before interest and investment income; interest expense, net of
amounts capitalized; income tax expense; loss on extinguishment of debt and credit facilities,
net; (gain) loss on investments; other expense (income); restructuring, impairments and
related costs; depreciation and amortization; and share-based payment expense as adjusted
income (loss) from operations. Adjusted income (loss) from operations is not a measure of
financial performance under GAAP. We believe adjusted income (loss) from operations is a
useful measure of our operating performance. We use adjusted income (loss) from operations for
budgetary and planning purposes; to assess the relative profitability and on-going performance
of our consolidated operations; to compare our performance from period-to-period; and to
compare our performance to that of our competitors. We also believe adjusted income (loss)
from operations is useful to investors to compare our operating performance to the performance
of other communications, entertainment and media companies. We believe that investors use
current and projected adjusted income (loss) from operations to estimate our current or
prospective enterprise value and to make investment decisions.  44




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Because we fund and build-out our satellite radio system through the periodic raising and
expenditure of large amounts of capital, our results of operations reflect significant charges
for interest and depreciation expense. We believe adjusted income (loss) from operations
provides useful information about the operating performance of our business apart from the
costs associated with our capital structure and physical plant. The exclusion of interest and
depreciation and amortization expense is useful given fluctuations in interest rates and
significant variation in depreciation and amortization expense that can result from the amount
and timing of capital expenditures and potential variations in estimated useful lives, all of
which can vary widely across different industries or among companies within the same industry.
We believe the exclusion of taxes is appropriate for comparability purposes as the tax
positions of companies can vary because of their differing abilities to take advantage of tax
benefits and because of the tax policies of the various jurisdictions in which they operate. We
believe the exclusion of restructuring, impairments and related costs is useful given the
non-recurring nature of these expenses. We also believe the exclusion of share-based payment
expense is useful given the significant variation in expense that can result from changes in
the fair market value of Sirius common stock. To compensate for the exclusion of taxes, other
expense (income), depreciation and amortization and share-based payment expense, we separately
measure and budget for these items.There are material limitations associated with the use of adjusted income (loss) from
operations in evaluating our company compared with net loss, which reflects overall financial
performance, including the effects of taxes, other (income) expense, depreciation and
amortization, restructuring, impairments and related costs and share-based payment expense. We
use adjusted income (loss) from operations to supplement GAAP results to provide a more
complete understanding of the factors and trends affecting the business than GAAP results
alone. Investors that wish to compare and evaluate our operating results after giving effect
for these costs, should refer to net loss as disclosed in our consolidated statements of
operations. Since adjusted income (loss) from operations is a non-GAAP financial measure, our
calculation of adjusted income (loss) from operations may be susceptible to varying
calculations; may not be comparable to other similarly titled measures of other companies; and
should not be considered in isolation, as a substitute for, or superior to measures of
financial performance prepared in accordance with GAAP.The reconciliation of the pro forma unadjusted net loss to the pro forma adjusted income (loss)
from operations is calculated as follows (see footnotes for reconciliation of the pro forma
amounts to their respective GAAP amounts) (in thousands): Unaudited Pro FormaFor the Three Months Ended December 31,2009
    
    
    2008Reconciliation of Net loss to Adjusted income (loss)
from operations:Net loss
    
    $
    (4,686
    )
    
    $
    (88,998
    )Add back Net loss items excluded from Adjusted income
(loss) from operations:Interest and investment income
    
    
    (789
    )
    
    
    667Interest expense, net of amounts capitalized
    
    
    51,725
    
    
    
    50,400Income tax expense
    
    
    729
    
    
    
    291Loss on extinguishment of debt and credit facilities, net
    
    
    4,021
    
    
    
    Loss on investments
    
    
    366
    
    
    
    22,673Other (income) expense
    
    
    (897
    )
    
    
    1,052Income (loss) from operations
    
    
    50,469
    
    
    
    (13,915
    )Restructuring, impairments and related costs
    
    
    2,640
    
    
    
    Depreciation and amortization
    
    
    25,042
    
    
    
    26,251Share-based payment expense
    
    
    4,209
    
    
    
    13,321Adjusted income (loss) from operations
    
    $
    82,360
    
    
    $
    25,657
   45




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##### Table of Contents



(9)
    
    The following tables reconcile our GAAP results of operations to our non-GAAP pro forma
unadjusted results of operations: Unaudited For the Three Months Ended December 31, 2009Allocation ofPurchase Price
    
    
    Share-basedAccounting
    
    
    Payment(in thousands)
    
    As Reported
    
    
    Adjustments
    
    
    Expense
    
    
    Pro FormaRevenue:Subscriber revenue, including effects of rebates
    
    $
    307,365
    
    
    $
    5,793
    
    
    $
    
    
    
    $
    313,158Advertising revenue, net of agency fees
    
    
    5,232
    
    
    
    
    
    
    
    
    
    
    
    5,232Equipment revenue
    
    
    11,892
    
    
    
    
    
    
    
    
    
    
    
    11,892Other revenue
    
    
    38,313
    
    
    
    1,813
    
    
    
    
    
    
    
    40,126Total revenue
    
    
    362,802
    
    
    
    7,606
    
    
    
    
    
    
    
    370,408Operating expenses (depreciation and amortization
shown separately below) (1)Cost of services:Satellite and transmission
    
    
    13,498
    
    
    
    327
    
    
    
    (412
    )
    
    
    13,413Programming and content
    
    
    22,505
    
    
    
    17,361
    
    
    
    603
    
    
    
    40,469Revenue share and royalties
    
    
    44,358
    
    
    
    24,172
    
    
    
    
    
    
    
    68,530Customer service and billing
    
    
    32,551
    
    
    
    94
    
    
    
    (418
    )
    
    
    32,227Cost of equipment
    
    
    4,126
    
    
    
    
    
    
    
    
    
    
    
    4,126Sales and marketing
    
    
    43,782
    
    
    
    3,522
    
    
    
    (59
    )
    
    
    47,245Subscriber acquisition costs
    
    
    40,871
    
    
    
    17,855
    
    
    
    
    
    
    
    58,726General and administrative
    
    
    21,807
    
    
    
    350
    
    
    
    (2,809
    )
    
    
    19,348Engineering, design and development
    
    
    4,873
    
    
    
    205
    
    
    
    (1,114
    )
    
    
    3,964Depreciation and amortization
    
    
    45,319
    
    
    
    (20,277
    )
    
    
    
    
    
    
    25,042Restructuring, impairments and related costs
    
    
    2,640
    
    
    
    
    
    
    
    
    
    
    
    2,640Share-based payment expense
    
    
    
    
    
    
    
    
    
    
    4,209
    
    
    
    4,209Total operating expenses
    
    
    276,330
    
    
    
    43,609
    
    
    
    
    
    
    
    319,939Income (loss) from operations
    
    
    86,472
    
    
    
    (36,003
    )
    
    
    
    
    
    
    50,469Other income (expense)Interest and investment income
    
    
    789
    
    
    
    
    
    
    
    
    
    
    
    789Interest expense, net of amounts capitalized
    
    
    (62,910
    )
    
    
    11,185
    
    
    
    
    
    
    
    (51,725
    )Gain (loss) on change in value of embedded derivatives
    
    
    78,169
    
    
    
    (78,169
    )
    
    
    
    
    
    
    Loss on extinguishment of debt and credit facilities, net
    
    
    (4,021
    )
    
    
    
    
    
    
    
    
    
    
    (4,021
    )Loss on investments
    
    
    (366
    )
    
    
    
    
    
    
    
    
    
    
    (366
    )Other income
    
    
    897
    
    
    
    
    
    
    
    
    
    
    
    897Total other income (expense)
    
    
    12,558
    
    
    
    (66,984
    )
    
    
    
    
    
    
    (54,426
    )Income (loss) before income taxes
    
    
    99,030
    
    
    
    (102,987
    )
    
    
    
    
    
    
    (3,957
    )Income tax expense
    
    
    (729
    )
    
    
    
    
    
    
    
    
    
    
    (729
    )Net income (loss)
    
    
    98,301
    
    
    
    (102,987
    )
    
    
    
    
    
    
    (4,686
    )Add: net income (loss) attributable to noncontrolling
interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net income (loss)  XM Satellite Radio Holdings Inc.
and Subsidiaries
    
    $
    98,301
    
    
    $
    (102,987
    )
    
    $
    
    
    
    $
    (4,686
    )(1)    Amounts related to share-based payment expense included
in operating expenses were as follows:Satellite and transmission
    
    $
    306
    
    
    $
    106
    
    
    $
    
    
    
    $
    412Programming and content
    
    
    (758
    )
    
    
    155
    
    
    
    
    
    
    
    (603
    )Customer service and billing
    
    
    324
    
    
    
    94
    
    
    
    
    
    
    
    418Sales and marketing
    
    
    (84
    )
    
    
    143
    
    
    
    
    
    
    
    59Subscriber acquisition costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    General and administrative
    
    
    2,459
    
    
    
    350
    
    
    
    
    
    
    
    2,809Engineering, design and development
    
    
    909
    
    
    
    205
    
    
    
    
    
    
    
    1,114Total share-based payment expense
    
    $
    3,156
    
    
    $
    1,053
    
    
    $
    
    
    
    $
    4,209
  46




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##### Table of Contents



Unaudited For the Three Months Ended December 31, 2008Allocation ofPurchase Price
    
    
    Share-basedAccounting
    
    
    Payment(in thousands)
    
    As Reported
    
    
    Adjustments (a)
    
    
    Expense
    
    
    Pro FormaRevenue:Subscriber revenue, including effects of rebates
    
    $
    289,424
    
    
    $
    20,099
    
    
    $
    
    
    
    $
    309,523Advertising revenue, net of agency fees
    
    
    4,845
    
    
    
    
    
    
    
    
    
    
    
    4,845Equipment revenue
    
    
    15,640
    
    
    
    
    
    
    
    
    
    
    
    15,640Other revenue
    
    
    5,642
    
    
    
    1,826
    
    
    
    
    
    
    
    7,468Total revenue
    
    
    315,551
    
    
    
    21,925
    
    
    
    
    
    
    
    337,476Operating expenses (depreciation and amortization
shown separately below) (1)Cost of services:Satellite and transmission
    
    
    17,394
    
    
    
    (214
    )
    
    
    (779
    )
    
    
    16,401Programming and content
    
    
    29,575
    
    
    
    20,755
    
    
    
    (1,273
    )
    
    
    49,057Revenue share and royalties
    
    
    52,593
    
    
    
    19,494
    
    
    
    
    
    
    
    72,087Customer service and billing
    
    
    35,948
    
    
    
    88
    
    
    
    (586
    )
    
    
    35,450Cost of equipment
    
    
    7,279
    
    
    
    
    
    
    
    
    
    
    
    7,279Sales and marketing
    
    
    47,153
    
    
    
    3,312
    
    
    
    (1,164
    )
    
    
    49,301Subscriber acquisition costs
    
    
    37,383
    
    
    
    19,219
    
    
    
    
    
    
    
    56,602General and administrative
    
    
    28,107
    
    
    
    306
    
    
    
    (8,157
    )
    
    
    20,256Engineering, design and development
    
    
    6,467
    
    
    
    281
    
    
    
    (1,362
    )
    
    
    5,386Impairment of goodwill
    
    
    1,574,208
    
    
    
    (1,574,208
    )
    
    
    
    
    
    
    Depreciation and amortization
    
    
    59,690
    
    
    
    (33,439
    )
    
    
    
    
    
    
    26,251Share-based payment expense
    
    
    
    
    
    
    
    
    
    
    13,321
    
    
    
    13,321Total operating expenses
    
    
    1,895,797
    
    
    
    (1,544,406
    )
    
    
    
    
    
    
    351,391(Loss) income from operations
    
    
    (1,580,246
    )
    
    
    1,566,331
    
    
    
    
    
    
    
    (13,915
    )Other income (expense)Interest and investment income
    
    
    (667
    )
    
    
    
    
    
    
    
    
    
    
    (667
    )Interest expense, net of amounts capitalized
    
    
    (59,357
    )
    
    
    8,957
    
    
    
    
    
    
    
    (50,400
    )Gain (loss) on change in value of embedded derivatives
    
    
    80,124
    
    
    
    (80,124
    )
    
    
    
    
    
    
    Loss on extinguishment of debt and credit facilities, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Loss on investments
    
    
    (22,673
    )
    
    
    
    
    
    
    
    
    
    
    (22,673
    )Other expense
    
    
    (1,052
    )
    
    
    
    
    
    
    
    
    
    
    (1,052
    )Total other expense
    
    
    (3,625
    )
    
    
    (71,167
    )
    
    
    
    
    
    
    (74,792
    )(Loss) income before income taxes
    
    
    (1,583,871
    )
    
    
    1,495,164
    
    
    
    
    
    
    
    (88,707
    )Income tax expense
    
    
    (291
    )
    
    
    
    
    
    
    
    
    
    
    (291
    )Net (loss) income
    
    
    (1,584,162
    )
    
    
    1,495,164
    
    
    
    
    
    
    
    (88,998
    )Add: net income (loss) attributable to noncontrolling
interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net (loss) income  XM Satellite Radio Holdings Inc.
and Subsidiaries
    
    $
    (1,584,162
    )
    
    $
    1,495,164
    
    
    $
    
    
    
    $
    (88,998
    )(1)    Amounts related to share-based payment expense included
in operating expenses were as follows:Satellite and transmission
    
    $
    712
    
    
    $
    67
    
    
    $
    
    
    
    $
    779Programming and content
    
    
    1,191
    
    
    
    82
    
    
    
    
    
    
    
    1,273Customer service and billing
    
    
    499
    
    
    
    87
    
    
    
    
    
    
    
    586Sales and marketing
    
    
    1,030
    
    
    
    134
    
    
    
    
    
    
    
    1,164Subscriber acquisition costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    General and administrative
    
    
    7,851
    
    
    
    306
    
    
    
    
    
    
    
    8,157Engineering, design and development
    
    
    1,080
    
    
    
    282
    
    
    
    
    
    
    
    1,362Total share-based payment expense
    
    $
    12,363
    
    
    $
    958
    
    
    $
    
    
    
    $
    13,321
 
 (a)
    
    Includes impairment of goodwill.  47




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##### Table of Contents



(10)
    
    ARPU is calculated as follows (in thousands, except for subscriber and per subscriber
amounts): Unaudited Pro FormaFor the Years Ended December 31,2009
    
    
    2008Subscriber revenue
    
    $
    1,238,217
    
    
    $
    1,181,860Net advertising revenue
    
    
    18,708
    
    
    
    32,753Total subscriber and net advertising
revenue
    
    $
    1,256,925
    
    
    $
    1,214,613Daily weighted average number of subscribers
    
    
    9,687,489
    
    
    
    9,572,997ARPU
    
    $
    10.81
    
    
    $
    10.57
 (11)
    
    SAC, as adjusted, per gross subscriber addition is calculated as follows (in thousands,
except for subscriber and per subscriber amounts): Unaudited Pro FormaFor the Years Ended December 31,2009
    
    
    2008Subscriber acquisition cost
    
    $
    185,559
    
    
    $
    270,662Less: share-based payment expense granted
to third parties and employees
    
    
    
    
    
    
    (Less) Add: margin from direct sales of radios
and accessories
    
    
    (13,399
    )
    
    
    (76
    )SAC, as adjusted
    
    $
    172,160
    
    
    $
    270,586Gross subscriber additions
    
    
    3,184,559
    
    
    
    3,956,653SAC, as adjusted, per gross subscriber
addition
    
    $
    54
    
    
    $
    68
 (12)
    
    Customer service and billing expenses, as adjusted, per average subscriber is calculated
as follows (in thousands, except for subscriber and per subscriber amounts): Unaudited Pro FormaFor the Years Ended December 31,2009
    
    
    2008Customer service and billing expenses
    
    $
    129,172
    
    
    $
    142,907Less: share-based payment expense
    
    
    (1,855
    )
    
    
    (2,892
    )Customer service and billing expenses, as
adjusted
    
    $
    127,317
    
    
    $
    140,015Daily weighted average number of subscribers
    
    
    9,687,489
    
    
    
    9,572,997Customer service and billing expenses, as
adjusted,
per average subscriber
    
    $
    1.10
    
    
    $
    1.22
 (13)
    
    Free cash flow is calculated as follows (in thousands): Unaudited Pro FormaFor the Years Ended December 31,2009
    
    
    2008Net cash provided by (used in)
operating activities
    
    $
    272,833
    
    
    $
    (243,847
    )Additions to property and equipment
    
    
    (53,465
    )
    
    
    (44,290
    )Restricted and other investment activity
    
    
    
    
    
    
    25Free cash flow
    
    $
    219,368
    
    
    $
    (288,112
    )
  48




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##### Table of Contents



(14)
    
    Adjusted income (loss) from operations is calculated as follows (in thousands): Unaudited Pro FormaFor the Years Ended December 31,2009
    
    
    2008Reconciliation of Net loss to Adjusted income (loss) from
operations:Net loss
    
    $
    (247,712
    )
    
    $
    (473,353
    )Add back Net loss items excluded from Adjusted income
(loss) from
operations:Interest and investment income
    
    
    (2,637
    )
    
    
    (6,309
    )Interest expense, net of amounts capitalized
    
    
    243,740
    
    
    
    164,050Income tax expense (benefit)
    
    
    2,463
    
    
    
    2,475Loss on extinguishment of debt and credit facilities, net
    
    
    115,884
    
    
    
    Loss on investments
    
    
    7,026
    
    
    
    38,772Other (income) expense
    
    
    (3,446
    )
    
    
    4,226Income (loss) from operations
    
    
    115,318
    
    
    
    (270,139
    )Restructuring, impairments and related costs
    
    
    32,254
    
    
    
    Depreciation and amortization
    
    
    85,476
    
    
    
    136,129Share-based payment expense
    
    
    40,496
    
    
    
    55,188Adjusted income (loss) from operations
    
    $
    273,544
    
    
    $
    (78,822
    )
  49




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##### Table of Contents



(15)
    
    The following tables reconcile our GAAP results of operations to our non-GAAP pro forma
unadjusted results of operations: Unaudited For the Year Ended December 31, 2009Purchase PriceAccounting
    
    
    Allocation of Share-(in thousands)
    
    As Reported
    
    
    Adjustments
    
    
    based Payment Expense
    
    
    Pro FormaRevenue:Subscriber revenue, including effects of rebates
    
    $
    1,191,403
    
    
    $
    46,814
    
    
    $
    
    
    
    $
    1,238,217Advertising revenue, net of agency fees
    
    
    18,708
    
    
    
    
    
    
    
    
    
    
    
    18,708Equipment revenue
    
    
    29,574
    
    
    
    
    
    
    
    
    
    
    
    29,574Other revenue
    
    
    57,656
    
    
    
    7,251
    
    
    
    
    
    
    
    64,907Total revenue
    
    
    1,297,341
    
    
    
    54,065
    
    
    
    
    
    
    
    1,351,406Operating expenses (depreciation and amortization
shown separately below) (1)Cost of services:Satellite and transmission
    
    
    50,450
    
    
    
    1,339
    
    
    
    (1,835
    )
    
    
    49,954Programming and content
    
    
    106,858
    
    
    
    72,069
    
    
    
    (3,266
    )
    
    
    175,661Revenue share and royalties
    
    
    187,355
    
    
    
    89,780
    
    
    
    
    
    
    
    277,135Customer service and billing
    
    
    128,719
    
    
    
    453
    
    
    
    (1,855
    )
    
    
    127,317Cost of equipment
    
    
    16,175
    
    
    
    
    
    
    
    
    
    
    
    16,175Sales and marketing
    
    
    128,347
    
    
    
    13,507
    
    
    
    (4,434
    )
    
    
    137,420Subscriber acquisition costs
    
    
    124,395
    
    
    
    61,164
    
    
    
    
    
    
    
    185,559General and administrative
    
    
    113,497
    
    
    
    1,602
    
    
    
    (25,183
    )
    
    
    89,916Engineering, design and development
    
    
    21,671
    
    
    
    977
    
    
    
    (3,923
    )
    
    
    18,725Depreciation and amortization
    
    
    191,781
    
    
    
    (106,305
    )
    
    
    
    
    
    
    85,476Restructuring, impairments and related costs
    
    
    32,254
    
    
    
    
    
    
    
    
    
    
    
    32,254Share-based payment expense
    
    
    
    
    
    
    
    
    
    
    40,496
    
    
    
    40,496Total operating expenses
    
    
    1,101,502
    
    
    
    134,586
    
    
    
    
    
    
    
    1,236,088Income (loss) from operations
    
    
    195,839
    
    
    
    (80,521
    )
    
    
    
    
    
    
    115,318Other income (expense)Interest and investment income
    
    
    2,637
    
    
    
    
    
    
    
    
    
    
    
    2,637Interest expense, net of amounts capitalized
    
    
    (289,845
    )
    
    
    46,105
    
    
    
    
    
    
    
    (243,740
    )Gain (loss) on change in value of embedded
derivatives
    
    
    (33,534
    )
    
    
    33,534
    
    
    
    
    
    
    
    Loss on extinguishment of debt and credit
facilities, net
    
    
    (115,884
    )
    
    
    
    
    
    
    
    
    
    
    (115,884
    )Loss on investments
    
    
    (7,026
    )
    
    
    
    
    
    
    
    
    
    
    (7,026
    )Other income
    
    
    3,446
    
    
    
    
    
    
    
    
    
    
    
    3,446Total other income (expense)
    
    
    (440,206
    )
    
    
    79,639
    
    
    
    
    
    
    
    (360,567
    )Loss before income taxes
    
    
    (244,367
    )
    
    
    (882
    )
    
    
    
    
    
    
    (245,249
    )Income tax expense
    
    
    (2,463
    )
    
    
    
    
    
    
    
    
    
    
    (2,463
    )Net loss
    
    
    (246,830
    )
    
    
    (882
    )
    
    
    
    
    
    
    (247,712
    )Add: net loss attributable to noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net loss  XM Satellite Radio Holdings Inc.
and Subsidiaries
    
    $
    (246,830
    )
    
    $
    (882
    )
    
    $
    
    
    
    $
    (247,712
    )(1)     Amounts related to share-based payment expense included in operating expenses were as follows:Satellite and transmission
    
    $
    1,378
    
    
    $
    457
    
    
    $
    
    
    
    $
    1,835Programming and content
    
    
    2,610
    
    
    
    656
    
    
    
    
    
    
    
    3,266Customer service and billing
    
    
    1,402
    
    
    
    453
    
    
    
    
    
    
    
    1,855Sales and marketing
    
    
    3,778
    
    
    
    656
    
    
    
    
    
    
    
    4,434Subscriber acquisition costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    General and administrative
    
    
    23,581
    
    
    
    1,602
    
    
    
    
    
    
    
    25,183Engineering, design and development
    
    
    2,946
    
    
    
    977
    
    
    
    
    
    
    
    3,923Total share-based payment expense
    
    $
    35,695
    
    
    $
    4,801
    
    
    $
    
    
    
    $
    40,496
  50




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##### Table of Contents



Unaudited For the Year Ended December 31, 2008As Reported
    
    
    Purchase PriceJanuary 1, 2008 Through
    
    
    August 1, 2008 Through
    
    
    Accounting
    
    
    Allocation of Share-(in thousands)
    
    July 31, 2008
    
    
    December 31, 2008
    
    
    Adjustments (a)
    
    
    based Payment Expense
    
    
    Pro FormaRevenue:Subscriber revenue, including effects of rebates
    
    $
    670,870
    
    
    $
    472,457
    
    
    $
    38,533
    
    
    $
    
    
    
    $
    1,181,860Advertising revenue, net of agency fees
    
    
    22,743
    
    
    
    10,010
    
    
    
    
    
    
    
    
    
    
    
    32,753Equipment revenue
    
    
    13,397
    
    
    
    18,991
    
    
    
    
    
    
    
    
    
    
    
    32,388Other revenue
    
    
    24,184
    
    
    
    9,696
    
    
    
    3,021
    
    
    
    
    
    
    
    36,901Total revenue
    
    
    731,194
    
    
    
    511,154
    
    
    
    41,554
    
    
    
    
    
    
    
    1,283,902Operating expenses (depreciation and amortization
shown separately below) (1)Cost of services:Satellite and transmission
    
    
    46,566
    
    
    
    29,852
    
    
    
    424
    
    
    
    (4,130
    )
    
    
    72,712Programming and content
    
    
    117,156
    
    
    
    47,621
    
    
    
    34,667
    
    
    
    (7,378
    )
    
    
    192,066Revenue share and royalties
    
    
    166,606
    
    
    
    91,132
    
    
    
    30,504
    
    
    
    
    
    
    
    288,242Customer service and billing
    
    
    82,947
    
    
    
    59,767
    
    
    
    193
    
    
    
    (2,892
    )
    
    
    140,015Cost of equipment
    
    
    20,013
    
    
    
    12,299
    
    
    
    
    
    
    
    
    
    
    
    32,312Sales and marketing
    
    
    126,054
    
    
    
    76,104
    
    
    
    5,393
    
    
    
    (9,615
    )
    
    
    197,936Subscriber acquisition costs
    
    
    174,083
    
    
    
    64,865
    
    
    
    31,714
    
    
    
    
    
    
    
    270,662General and administrative
    
    
    116,444
    
    
    
    47,322
    
    
    
    1,083
    
    
    
    (24,134
    )
    
    
    140,715Engineering, design and development
    
    
    23,045
    
    
    
    11,658
    
    
    
    400
    
    
    
    (7,039
    )
    
    
    28,064Impairment of goodwill
    
    
    
    
    
    
    6,601,046
    
    
    
    (6,601,046
    )
    
    
    
    
    
    
    Depreciation and amortization
    
    
    88,749
    
    
    
    94,310
    
    
    
    (46,930
    )
    
    
    
    
    
    
    136,129Share-based payment expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    55,188
    
    
    
    55,188Total operating expenses
    
    
    961,663
    
    
    
    7,135,976
    
    
    
    (6,543,598
    )
    
    
    
    
    
    
    1,554,041(Loss) income from operations
    
    
    (230,469
    )
    
    
    (6,624,822
    )
    
    
    6,585,152
    
    
    
    
    
    
    
    (270,139
    )Other income (expense)Interest and investment income
    
    
    3,013
    
    
    
    3,296
    
    
    
    
    
    
    
    
    
    
    
    6,309Interest expense, net of amounts capitalized
    
    
    (73,937
    )
    
    
    (107,155
    )
    
    
    17,042
    
    
    
    
    
    
    
    (164,050
    )Gain (loss) on change in value of embedded
derivatives
    
    
    
    
    
    
    322,347
    
    
    
    (322,347
    )
    
    
    
    
    
    
    Loss on extinguishment of debt and credit
facilities, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Loss on investments
    
    
    (13,010
    )
    
    
    (25,762
    )
    
    
    
    
    
    
    
    
    
    
    (38,772
    )Other income (expense)
    
    
    900
    
    
    
    (5,126
    )
    
    
    
    
    
    
    
    
    
    
    (4,226
    )Total other (expense) income
    
    
    (83,034
    )
    
    
    187,600
    
    
    
    (305,305
    )
    
    
    
    
    
    
    (200,739
    )(Loss) income before income taxes
    
    
    (313,503
    )
    
    
    (6,437,222
    )
    
    
    6,279,847
    
    
    
    
    
    
    
    (470,878
    )Income tax expense
    
    
    (1,512
    )
    
    
    (963
    )
    
    
    
    
    
    
    
    
    
    
    (2,475
    )Net (loss) income
    
    
    (315,015
    )
    
    
    (6,438,185
    )
    
    
    6,279,847
    
    
    
    
    
    
    
    (473,353
    )Add: net loss attributable to noncontrolling interests
    
    
    (7,443
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,443
    )Net (loss) income  XM Satellite Radio Holdings Inc.
and Subsidiaries
    
    $
    (322,458
    )
    
    $
    (6,438,185
    )
    
    $
    6,279,847
    
    
    $
    
    
    
    $
    (480,796
    )(1)     Amounts related to share-based payment expense included in operating expenses were as follows:Satellite and transmission
    
    $
    2,745
    
    
    $
    1,282
    
    
    $
    103
    
    
    $
    
    
    
    $
    4,130Programming and content
    
    
    4,949
    
    
    
    2,152
    
    
    
    277
    
    
    
    
    
    
    
    7,378Customer service and billing
    
    
    1,869
    
    
    
    831
    
    
    
    192
    
    
    
    
    
    
    
    2,892Sales and marketing
    
    
    7,047
    
    
    
    2,068
    
    
    
    500
    
    
    
    
    
    
    
    9,615Subscriber acquisition costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    General and administrative
    
    
    13,200
    
    
    
    9,851
    
    
    
    1,083
    
    
    
    
    
    
    
    24,134Engineering, design and development
    
    
    4,675
    
    
    
    1,790
    
    
    
    574
    
    
    
    
    
    
    
    7,039Total share-based payment expense
    
    $
    34,485
    
    
    $
    17,974
    
    
    $
    2,729
    
    
    $
    
    
    
    $
    55,188
 
 (a)
    
    Includes impairment of goodwill.(16)
    
    ARPU is calculated as follows (in thousands, except for subscriber and per subscriber
amounts): Unaudited ActualFor the Three Months Ended December 31,2009
    
    
    2008Subscriber revenue
    
    $
    307,365
    
    
    $
    289,424Net advertising revenue
    
    
    5,232
    
    
    
    4,845Total subscriber and net advertising
revenue
    
    $
    312,597
    
    
    $
    294,269Daily weighted average number of subscribers
    
    
    9,703,031
    
    
    
    9,825,521ARPU
    
    $
    10.74
    
    
    $
    9.98
  51




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(17)
    
    SAC, as adjusted, per gross subscriber addition is calculated as follows (in thousands,
except for subscriber and per subscriber amounts): Unaudited ActualFor the Three Months Ended December 31,2009
    
    
    2008Subscriber acquisition cost
    
    $
    40,871
    
    
    $
    37,383Less: share-based payment expense granted
to third parties and employees
    
    
    
    
    
    
    (Less) Add: margin from direct sales of radios
and accessories
    
    
    (7,766
    )
    
    
    (8,361
    )SAC, as adjusted
    
    $
    33,105
    
    
    $
    29,022Gross subscriber additions
    
    
    895,199
    
    
    
    794,809SAC, as adjusted, per gross subscriber
addition
    
    $
    37
    
    
    $
    37
 (18)
    
    Customer service and billing expenses, as adjusted, per average subscriber is calculated
as follows (in thousands, except for subscriber and per subscriber amounts): Unaudited ActualFor the Three Months Ended December 31,2009
    
    
    2008Customer service and billing expenses
    
    $
    32,551
    
    
    $
    35,948Less: share-based payment expense
    
    
    (324
    )
    
    
    (499
    )Customer service and billing expenses, as
adjusted
    
    $
    32,227
    
    
    $
    35,449Daily weighted average number of subscribers
    
    
    9,703,031
    
    
    
    9,825,521Customer service and billing expenses, as
adjusted,
per average subscriber
    
    $
    1.11
    
    
    $
    1.20
 (19)
    
    Free cash flow is calculated as follows (in thousands): Unaudited ActualFor the Three Months Ended December 31,2009
    
    
    2008Net cash provided by (used in)
operating activities
    
    $
    44,215
    
    
    $
    1,636Additions to property and equipment
    
    
    (14,654
    )
    
    
    (5,554
    )Restricted and other investment activity
    
    
    
    
    
    
    Free cash flow
    
    $
    29,561
    
    
    $
    (3,918
    )
  52




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(20)
    
    Adjusted income (loss) from operations is calculated as follows (in thousands): Unaudited ActualFor the Three Months Ended December 31,2009
    
    
    2008Reconciliation of Net income (loss) to Adjusted income
(loss) from operations:Net loss
    
    $
    98,301
    
    
    $
    (1,584,162
    )Add back Net income (loss) items excluded from Adjusted
income (loss) from
operations:Interest and investment income
    
    
    (789
    )
    
    
    667Interest expense, net of amounts capitalized
    
    
    62,910
    
    
    
    59,357Income tax expense
    
    
    729
    
    
    
    291(Gain) loss on change in value of embedded derivatives
    
    
    (78,169
    )
    
    
    (80,124
    )Loss on extinguishment of debt and credit facilities, net
    
    
    4,021
    
    
    
    Loss on investments
    
    
    366
    
    
    
    22,673Other (income) expense
    
    
    (897
    )
    
    
    1,052Income (loss) from operations
    
    
    86,472
    
    
    
    (1,580,246
    )Impairment of goodwill
    
    
    
    
    
    
    1,574,208Restructuring, impairments and related costs
    
    
    2,640
    
    
    
    Depreciation and amortization
    
    
    45,319
    
    
    
    59,690Share-based payment expense
    
    
    3,156
    
    
    
    12,363Adjusted income (loss) from operations
    
    $
    137,587
    
    
    $
    66,015
  53




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(21)
    
    ARPU is calculated as follows (in thousands, except for subscriber and per subscriber
amounts): ActualFor the Year Ended December 31,2009
    
    
    2008
    
    
    2007Subscriber revenue
    
    $
    1,191,403
    
    
    $
    1,143,327
    
    
    $
    1,033,776Net advertising revenue
    
    
    18,708
    
    
    
    32,753
    
    
    
    39,148Total subscriber and net advertising
revenue
    
    $
    1,210,111
    
    
    $
    1,176,080
    
    
    $
    1,072,924Daily weighted average number of subscribers
    
    
    9,687,489
    
    
    
    9,572,997
    
    
    
    8,256,659ARPU
    
    $
    10.41
    
    
    $
    10.24
    
    
    $
    10.83
 (22)
    
    SAC, as adjusted, per gross subscriber addition is calculated as follows (in thousands,
except for subscriber and per subscriber amounts): ActualFor the Year Ended December 31,2009
    
    
    2008
    
    
    2007Subscriber acquisition cost
    
    $
    124,395
    
    
    $
    238,948
    
    
    $
    259,143Less: share-based payment expense granted
to third parties and employees
    
    
    
    
    
    
    
    
    
    
    (9,167
    )(Less) Add: margin from direct sales of radios
and accessories
    
    
    (13,399
    )
    
    
    (76
    )
    
    
    33,670SAC, as adjusted
    
    $
    110,996
    
    
    $
    238,872
    
    
    $
    283,646Gross subscriber additions
    
    
    3,184,559
    
    
    
    3,956,653
    
    
    
    3,893,773SAC, as adjusted, per gross subscriber
addition
    
    $
    35
    
    
    $
    60
    
    
    $
    73
 (23)
    
    Customer service and billing expenses, as adjusted, per average subscriber is calculated as
follows (in thousands, except for subscriber and per subscriber amounts): ActualFor the Year Ended December 31,2009
    
    
    2008
    
    
    2007Customer service and billing expenses
    
    $
    128,719
    
    
    $
    142,714
    
    
    $
    126,776Less: share-based payment expense
    
    
    (1,402
    )
    
    
    (2,700
    )
    
    
    (2,483
    )Customer service and billing expenses, as
adjusted
    
    $
    127,317
    
    
    $
    140,014
    
    
    $
    124,293Daily weighted average number of subscribers
    
    
    9,687,489
    
    
    
    9,572,997
    
    
    
    8,256,659Customer service and billing expenses, as
adjusted,
per average subscriber
    
    $
    1.10
    
    
    $
    1.22
    
    
    $
    1.25
 (24)
    
    Free cash flow is calculated as follows (in thousands): ActualFor the Year Ended December 31,2009
    
    
    2008
    
    
    2007Net cash provided by (used in)
operating activities
    
    $
    272,833
    
    
    $
    (243,847
    )
    
    $
    (154,730
    )Additions to property and equipment
    
    
    (53,465
    )
    
    
    (44,290
    )
    
    
    (133,338
    )Restricted and other investment activity
    
    
    
    
    
    
    25
    
    
    
    1,823Free cash flow
    
    $
    219,368
    
    
    $
    (288,112
    )
    
    $
    (286,245
    )
  54




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(25)
    
    Adjusted income (loss) from operations is calculated as follows (in thousands): ActualFor the Year Ended December 31,2009
    
    
    2008
    
    
    2007Reconciliation of Net loss to Adjusted income (loss) from
operations:Net loss
    
    $
    (246,830
    )
    
    $
    (6,753,200
    )
    
    $
    (670,849
    )Add back Net loss items excluded from Adjusted income
(loss) from
operations:Interest and investment income
    
    
    (2,637
    )
    
    
    (6,309
    )
    
    
    (14,084
    )Interest expense, net of amounts capitalized
    
    
    289,845
    
    
    
    181,092
    
    
    
    116,605Income tax expense (benefit)
    
    
    2,463
    
    
    
    2,475
    
    
    
    (939
    )Loss (gain) on change in value of embedded derivatives
    
    
    33,534
    
    
    
    (322,347
    )
    
    
    Loss on extinguishment of debt and credit facilities, net
    
    
    115,884
    
    
    
    
    
    
    
    3,693Loss on investments
    
    
    7,026
    
    
    
    38,772
    
    
    
    56,156Other (income) expense
    
    
    (3,446
    )
    
    
    4,226
    
    
    
    (2,019
    )Income (loss) from operations
    
    
    195,839
    
    
    
    (6,855,291
    )
    
    
    (511,437
    )Impairment of goodwill
    
    
    
    
    
    
    6,601,046
    
    
    
    Restructuring, impairments and related costs
    
    
    32,254
    
    
    
    
    
    
    
    Depreciation and amortization
    
    
    191,781
    
    
    
    183,059
    
    
    
    187,196Share-based payment expense
    
    
    35,695
    
    
    
    52,459
    
    
    
    86,199Adjusted income (loss) from operations
    
    $
    455,569
    
    
    $
    (18,727
    )
    
    $
    (238,042
    )
  55




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##### Table of Contents



(26)
    
    The following tables combine our Predecessor and Successor GAAP Results of operations for
the years ended December 31, 2009, 2008 and 2007 (in thousands): Successor Entity
    
    
    
    Predecessor Entity
    
    
    Combined
    
    
    Predecessor EntityFor the Year
    
    
    August 1, 2008
    
    
    
    January 1, 2008
    
    
    For the Year
    
    
    For the YearEnded
    
    
    Through
    
    
    
    Through
    
    
    Ended
    
    
    EndedDecember 31, 2009
    
    
    December 31, 2008
    
    
    
    July 31, 2008
    
    
    December 31, 2008
    
    
    December 31, 2007Revenue:Subscriber revenue, including effects of rebates
    
    $
    1,191,403
    
    
    $
    472,457
    
    
    
    $
    670,870
    
    
    $
    1,143,327
    
    
    $
    1,033,776Advertising revenue, net of agency fees
    
    
    18,708
    
    
    
    10,010
    
    
    
    
    22,743
    
    
    
    32,753
    
    
    
    39,148Equipment revenue
    
    
    29,574
    
    
    
    18,991
    
    
    
    
    13,397
    
    
    
    32,388
    
    
    
    28,333Other revenue
    
    
    57,656
    
    
    
    9,696
    
    
    
    
    24,184
    
    
    
    33,880
    
    
    
    35,285Total revenue
    
    
    1,297,341
    
    
    
    511,154
    
    
    
    
    731,194
    
    
    
    1,242,348
    
    
    
    1,136,542Operating expenses (depreciation and amortization
shown separately below) (1)Cost of services:Satellite and transmission
    
    
    50,450
    
    
    
    29,852
    
    
    
    
    46,566
    
    
    
    76,418
    
    
    
    81,036Programming and content
    
    
    106,858
    
    
    
    47,621
    
    
    
    
    117,156
    
    
    
    164,777
    
    
    
    183,900Revenue share and royalties
    
    
    187,355
    
    
    
    91,132
    
    
    
    
    166,606
    
    
    
    257,738
    
    
    
    256,344Customer service and billing
    
    
    128,719
    
    
    
    59,767
    
    
    
    
    82,947
    
    
    
    142,714
    
    
    
    126,776Cost of equipment
    
    
    16,175
    
    
    
    12,299
    
    
    
    
    20,013
    
    
    
    32,312
    
    
    
    62,003Sales and marketing
    
    
    128,347
    
    
    
    76,104
    
    
    
    
    126,054
    
    
    
    202,158
    
    
    
    269,930Subscriber acquisition costs
    
    
    124,395
    
    
    
    64,865
    
    
    
    
    174,083
    
    
    
    238,948
    
    
    
    259,143General and administrative
    
    
    113,497
    
    
    
    47,322
    
    
    
    
    116,444
    
    
    
    163,766
    
    
    
    188,574Engineering, design and development
    
    
    21,671
    
    
    
    11,658
    
    
    
    
    23,045
    
    
    
    34,703
    
    
    
    33,077Impairment of goodwill
    
    
    
    
    
    
    6,601,046
    
    
    
    
    
    
    
    
    6,601,046
    
    
    
    Depreciation and amortization
    
    
    191,781
    
    
    
    94,310
    
    
    
    
    88,749
    
    
    
    183,059
    
    
    
    187,196Restructuring, impairments and related costs
    
    
    32,254
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total operating expenses
    
    
    1,101,502
    
    
    
    7,135,976
    
    
    
    
    961,663
    
    
    
    8,097,639
    
    
    
    1,647,979Income (loss) from operations
    
    
    195,839
    
    
    
    (6,624,822
    )
    
    
    
    (230,469
    )
    
    
    (6,855,291
    )
    
    
    (511,437
    )Other income (expense)Interest and investment income
    
    
    2,637
    
    
    
    3,296
    
    
    
    
    3,013
    
    
    
    6,309
    
    
    
    14,084Interest expense, net of amounts capitalized
    
    
    (289,845
    )
    
    
    (107,155
    )
    
    
    
    (73,937
    )
    
    
    (181,092
    )
    
    
    (116,605
    )(Loss) gain on change in value of embedded derivatives
    
    
    (33,534
    )
    
    
    322,347
    
    
    
    
    
    
    
    
    322,347
    
    
    
    Loss on extinguishment of debt and credit facilities, net
    
    
    (115,884
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,693
    )Loss on investments
    
    
    (7,026
    )
    
    
    (25,762
    )
    
    
    
    (13,010
    )
    
    
    (38,772
    )
    
    
    (56,156
    )Other income (expense)
    
    
    3,446
    
    
    
    (5,126
    )
    
    
    
    900
    
    
    
    (4,226
    )
    
    
    2,019Total other (expense) income
    
    
    (440,206
    )
    
    
    187,600
    
    
    
    
    (83,034
    )
    
    
    104,566
    
    
    
    (160,351
    )Loss before income taxes
    
    
    (244,367
    )
    
    
    (6,437,222
    )
    
    
    
    (313,503
    )
    
    
    (6,750,725
    )
    
    
    (671,788
    )Income tax (expense) benefit
    
    
    (2,463
    )
    
    
    (963
    )
    
    
    
    (1,512
    )
    
    
    (2,475
    )
    
    
    939Net loss
    
    
    (246,830
    )
    
    
    (6,438,185
    )
    
    
    
    (315,015
    )
    
    
    (6,753,200
    )
    
    
    (670,849
    )Add: net loss attributable to noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    (7,443
    )
    
    
    (7,443
    )
    
    
    (11,532
    )Net loss  XM Satellite Radio Holdings Inc.
and Subsidiaries
    
    $
    (246,830
    )
    
    $
    (6,438,185
    )
    
    
    $
    (322,458
    )
    
    $
    (6,760,643
    )
    
    $
    (682,381
    )(1)     Amounts related to share-based payment expense included in operating expenses were as follows:Satellite and transmission
    
    $
    1,378
    
    
    $
    1,282
    
    
    
    $
    2,745
    
    
    $
    4,027
    
    
    $
    5,024Programming and content
    
    
    2,610
    
    
    
    2,152
    
    
    
    
    4,949
    
    
    
    7,101
    
    
    
    8,855Customer service and billing
    
    
    1,402
    
    
    
    831
    
    
    
    
    1,869
    
    
    
    2,700
    
    
    
    2,483Sales and marketing
    
    
    3,778
    
    
    
    2,068
    
    
    
    
    7,047
    
    
    
    9,115
    
    
    
    24,452Subscriber acquisition costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,167General and administrative
    
    
    23,581
    
    
    
    9,851
    
    
    
    
    13,200
    
    
    
    23,051
    
    
    
    28,289Engineering, design and development
    
    
    2,946
    
    
    
    1,790
    
    
    
    
    4,675
    
    
    
    6,465
    
    
    
    7,929Total share-based payment expense
    
    $
    35,695
    
    
    $
    17,974
    
    
    
    $
    34,485
    
    
    $
    52,459
    
    
    $
    86,199
  56




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##### Table of Contents



ITEM 7A.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISKS
    
 ITEM 8.
    
    CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
  
 ITEM 9.
    
    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
  
 ITEM 9A.
    
    CONTROLS AND PROCEDURES
 Controls and Procedures
  Managements Report on Internal Control over Financial Reporting
  Audit Report of the Independent Registered Public Accounting Firm
  
 ITEM 9B.
    
    OTHER INFORMATION
   57




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##### Table of Contents



PART III
 
 ITEM 10.
    
    DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
  
 ITEM 11.
    
    EXECUTIVE COMPENSATION
  
 ITEM 12.
    
    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS
  
 ITEM 13.
    
    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
  
 ITEM 14.
    
    PRINCIPAL ACCOUNTING FEES AND SERVICES
 Independent Registered Public Accounting Firm
  Successor Entity
    
    
    
    Predecessor EntityYear Ended
    
    
    August 1, 2008
    
    
    
    January 1, 2008December 31, 2009
    
    
    Through December 31, 2008
    
    
    
    Through July 31, 2008Audit Fees (1)
    
    $
    426,592
    
    
    $
    453,127
    
    
    
    $
    287,857Audit-Related Fees (2)
    
    
    25,000
    
    
    
    25,000
    
    
    
    
    271,541Tax Fees
    
    
    
    
    
    
    
    
    
    
    
    All Other Fees
    
    
    
    
    
    
    
    
    
    
    
    $
    451,592
    
    
    $
    478,127
    
    
    
    $
    559,398
 (1)
    
    Includes fees for integrated audit, quarterly reviews and regulatory filings.(2)
    
    Includes fees for agreed upon procedures engagements and benefit plan audits.   58




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##### Table of Contents



PART IV
 
 ITEM 15.
    
    EXHIBITS AND CONSOLIDATED FINANCIAL STATEMENT SCHEDULES
 (a)
    
    Financial Statements, Financial Statement Schedules and Exhibits
 (1)
    
    Financial Statements. See Index to Consolidated Financial Statements appearing on
page F-1.
 (2)
    
    Financial Statement Schedules. See Index to Consolidated Financial Statements
appearing on page F-1.
 (3)
    
    Exhibits.
 (a)(2) The following Consolidated Financial Statement Schedule is filed as part of this report and
attached hereto as page F-44:
     59




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##### Table of Contents



SIGNATURES
 th
 XM Satellite Radio Holdings Inc.By:
    /s/ David J. FrearDavid J. FrearTreasurer
(Principal Financial Officer and
Principal Accounting Officer)  Signature
    
    Title
    
    Date/s/ Mel Karmazin

(Mel Karmazin)
    
    President and
Director (Principal
Executive Officer)
    
    February 25, 2010/s/ David J. Frear

(David J. Frear)
    
    Treasurer and
Director (Principal
Financial Officer and
Principal Accounting
Officer)
    
    February 25, 2010/s/ Patrick L. Donnelly
    
    Secretary and Director
    
    February 25, 2010(Patrick L. Donnelly)
  60




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##### Table of Contents



SIGNATURES
 th
 XM Satellite Radio Inc.By:
    /s/ David J. FrearDavid J. FrearTreasurer
(Principal Financial Officer and
Principal Accounting Officer)  Signature
    
    Title
    
    Date/s/ Mel Karmazin

(Mel Karmazin)
    
    President and
Director (Principal
Executive Officer)
    
    February 25, 2010/s/ David J. Frear

(David J. Frear)
    
    Treasurer and
Director (Principal
Financial Officer and
Principal Accounting
Officer)
    
    February 25, 2010/s/ Patrick L. Donnelly

(Patrick L. Donnelly)
    
    Secretary and Director
    
    February 25, 2010
  61




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##### Table of Contents



XM SATELLITE RADIO HOLDINGS INC. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 Reports of Independent Registered Public Accounting Firm
    
    
    F-2Consolidated Statements of Operations for the year ended December
31, 2009 and periods from August 1, 2008 to December 31, 2008
(Successor Periods), and from January 1, 2008 to July 31, 2008 and
for the year ended December 31, 2007 (Predecessor Periods)
    
    
    F-4Consolidated Balance Sheets as of December 31, 2009 and 2008
    
    
    F-5Consolidated Statements of Stockholders Deficit and Comprehensive
Loss for the year ended December 31, 2009 and periods from August 1, 2008 to December 31, 2008 (Successor Periods), and from
January 1, 2008 to July 31, 2008 and for the year ended December 31, 2007
(Predecessor Periods)
    
    
    F-6Consolidated Statements of Cash Flows for the year ended December
31, 2009 and periods from August 1, 2008 to December 31, 2008
(Successor Periods), and from January 1, 2008 to July 31, 2008 and
for the year ended December 31, 2007 (Predecessor Periods)
    
    
    F-8Notes to Consolidated Financial Statements
    
    
    F-9Schedule IISchedule of Valuation and Qualifying Accounts
    
    
    F-43
  F-1




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
        
  F-2




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
         
  F-3




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##### Table of Contents



XM SATELLITE RADIO HOLDINGS INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 Successor Entity
    
    
    
    Predecessor EntityYear Ended
    
    
    August 1, 2008
    
    
    
    January 1, 2008
    
    
    Year EndedDecember 31,
    
    
    Through
    
    
    
    Through
    
    
    December 31,(in thousands)
    
    2009
    
    
    December 31, 2008
    
    
    
    July 31, 2008
    
    
    2007Revenue:Subscriber revenue, including effects of rebates
    
    $
    1,191,403
    
    
    $
    472,457
    
    
    
    $
    670,870
    
    
    $
    1,033,776Advertising revenue, net of agency fees
    
    
    18,708
    
    
    
    10,010
    
    
    
    
    22,743
    
    
    
    39,148Equipment revenue
    
    
    29,574
    
    
    
    18,991
    
    
    
    
    13,397
    
    
    
    28,333Other revenue
    
    
    57,656
    
    
    
    9,696
    
    
    
    
    24,184
    
    
    
    35,285Total revenue
    
    
    1,297,341
    
    
    
    511,154
    
    
    
    
    731,194
    
    
    
    1,136,542Operating expenses (depreciation and amortization
shown separately below) (1):Cost of services:Satellite and transmission
    
    
    50,450
    
    
    
    29,852
    
    
    
    
    46,566
    
    
    
    81,036Programming and content
    
    
    106,858
    
    
    
    47,621
    
    
    
    
    117,156
    
    
    
    183,900Revenue share and royalties
    
    
    187,355
    
    
    
    91,132
    
    
    
    
    166,606
    
    
    
    256,344Customer service and billing
    
    
    128,719
    
    
    
    59,767
    
    
    
    
    82,947
    
    
    
    126,776Cost of equipment
    
    
    16,175
    
    
    
    12,299
    
    
    
    
    20,013
    
    
    
    62,003Sales and marketing
    
    
    128,347
    
    
    
    76,104
    
    
    
    
    126,054
    
    
    
    269,930Subscriber acquisition costs
    
    
    124,395
    
    
    
    64,865
    
    
    
    
    174,083
    
    
    
    259,143General and administrative
    
    
    113,497
    
    
    
    47,322
    
    
    
    
    116,444
    
    
    
    188,574Engineering, design and development
    
    
    21,671
    
    
    
    11,658
    
    
    
    
    23,045
    
    
    
    33,077Impairment of goodwill
    
    
    
    
    
    
    6,601,046
    
    
    
    
    
    
    
    
    Depreciation and amortization
    
    
    191,781
    
    
    
    94,310
    
    
    
    
    88,749
    
    
    
    187,196Restructuring, impairments and related costs
    
    
    32,254
    
    
    
    
    
    
    
    
    
    
    
    
    Total operating expenses
    
    
    1,101,502
    
    
    
    7,135,976
    
    
    
    
    961,663
    
    
    
    1,647,979Income (loss) from operations
    
    
    195,839
    
    
    
    (6,624,822
    )
    
    
    
    (230,469
    )
    
    
    (511,437
    )Other income (expense):Interest and investment income
    
    
    2,637
    
    
    
    3,296
    
    
    
    
    3,013
    
    
    
    14,084Interest expense, net of amounts capitalized
    
    
    (289,845
    )
    
    
    (107,155
    )
    
    
    
    (73,937
    )
    
    
    (116,605
    )(Loss) gain on change in value of embedded derivatives
    
    
    (33,534
    )
    
    
    322,347
    
    
    
    
    
    
    
    
    Loss on extinguishment of debt and credit facilities, net
    
    
    (115,884
    )
    
    
    
    
    
    
    
    
    
    
    
    (3,693
    )Loss on investments
    
    
    (7,026
    )
    
    
    (25,762
    )
    
    
    
    (13,010
    )
    
    
    (56,156
    )Other income (expense)
    
    
    3,446
    
    
    
    (5,126
    )
    
    
    
    900
    
    
    
    2,019Total other (expense) income
    
    
    (440,206
    )
    
    
    187,600
    
    
    
    
    (83,034
    )
    
    
    (160,351
    )Loss before income taxes
    
    
    (244,367
    )
    
    
    (6,437,222
    )
    
    
    
    (313,503
    )
    
    
    (671,788
    )Income tax (expense) benefit
    
    
    (2,463
    )
    
    
    (963
    )
    
    
    
    (1,512
    )
    
    
    939Net loss
    
    
    (246,830
    )
    
    
    (6,438,185
    )
    
    
    
    (315,015
    )
    
    
    (670,849
    )Add: net loss attributable to noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    (7,443
    )
    
    
    (11,532
    )Net loss  XM Satellite Radio Holdings Inc.
and Subsidiaries
    
    $
    (246,830
    )
    
    $
    (6,438,185
    )
    
    
    $
    (322,458
    )
    
    $
    (682,381
    )(1) Amounts related to share-based payment expense included in operating
expenses were as follows:Satellite and transmission
    
    $
    1,378
    
    
    $
    1,282
    
    
    
    $
    2,745
    
    
    $
    5,024Programming and content
    
    
    2,610
    
    
    
    2,152
    
    
    
    
    4,949
    
    
    
    8,855Customer service and billing
    
    
    1,402
    
    
    
    831
    
    
    
    
    1,869
    
    
    
    2,483Sales and marketing
    
    
    3,778
    
    
    
    2,068
    
    
    
    
    7,047
    
    
    
    24,452Subscriber acquisition costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,167General and administrative
    
    
    23,581
    
    
    
    9,851
    
    
    
    
    13,200
    
    
    
    28,289Engineering, design and development
    
    
    2,946
    
    
    
    1,790
    
    
    
    
    4,675
    
    
    
    7,929Total share-based payment expense
    
    $
    35,695
    
    
    $
    17,974
    
    
    
    $
    34,485
    
    
    $
    86,199
   F-4




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##### Table of Contents



XM SATELLITE RADIO HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
 As of December 31,(in thousands, except share and per share data)
    
    2009
    
    
    2008ASSETSCurrent assets:Cash and cash equivalents
    
    $
    212,155
    
    
    $
    206,740Accounts receivable, net
    
    
    60,042
    
    
    
    52,727Inventory, net
    
    
    4,016
    
    
    
    4,489Prepaid expenses
    
    
    75,199
    
    
    
    37,351Related party current assets
    
    
    103,479
    
    
    
    108,613Deferred tax asset
    
    
    64,641
    
    
    
    38,051Other current assets
    
    
    4,585
    
    
    
    12,361Total current assets
    
    
    524,117
    
    
    
    460,332Property and equipment, net
    
    
    799,405
    
    
    
    874,588FCC license
    
    
    2,000,000
    
    
    
    2,000,000Restricted investments
    
    
    250
    
    
    
    120,250Deferred financing fees, net
    
    
    5,307
    
    
    
    4,797Intangible assets, net
    
    
    611,461
    
    
    
    688,671Related party long-term assets
    
    
    110,439
    
    
    
    128,357Other long-term assets
    
    
    25,529
    
    
    
    34,284Total assets
    
    $
    4,076,508
    
    
    $
    4,311,279LIABILITIES AND STOCKHOLDERS DEFICITCurrent liabilities:Accounts payable and accrued expenses
    
    $
    198,219
    
    
    $
    237,299Accrued interest
    
    
    46,939
    
    
    
    50,543Current portion of deferred revenue
    
    
    509,216
    
    
    
    419,707Current portion of deferred credit on executory contracts
    
    
    252,831
    
    
    
    234,774Current maturities of long-term debt
    
    
    11,382
    
    
    
    355,739Related party current liabilities
    
    
    181,918
    
    
    
    83,930Total current liabilities
    
    
    1,200,505
    
    
    
    1,381,992Deferred revenue
    
    
    162,656
    
    
    
    131,255Deferred credit on executory contracts
    
    
    784,078
    
    
    
    1,037,190Long-term debt
    
    
    1,502,349
    
    
    
    1,413,596Long-term related party debt
    
    
    157,183
    
    
    
    Deferred tax liability
    
    
    915,274
    
    
    
    886,475Related party long-term liabilities
    
    
    17,508
    
    
    
    Other long-term liabilities
    
    
    38,851
    
    
    
    36,325Total liabilities
    
    
    4,778,404
    
    
    
    4,886,833Commitments and contingencies (Note 14)Stockholders deficit:Common stock, par value $0.01; 1,000 shares authorized;
100 shares
issued and outstanding as of December 31, 2009 and 2008
    
    
    
    
    
    
    Accumulated other comprehensive loss, net of tax
    
    
    (6,581
    )
    
    
    (7,871
    )Additional paid-in capital
    
    
    5,989,700
    
    
    
    5,870,502Accumulated deficit
    
    
    (6,685,015
    )
    
    
    (6,438,185
    )Total stockholders deficit
    
    
    (701,896
    )
    
    
    (575,554
    )Total liabilities and stockholders deficit
    
    $
    4,076,508
    
    
    $
    4,311,279
   F-5




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##### Table of Contents



XM SATELLITE RADIO HOLDINGS INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS DEFICIT AND COMPREHENSIVE LOSS
 Series A
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    AccumulatedConvertible
    
    
    Class A
    
    
    
    
    
    
    
    
    
    
    Additional
    
    
    
    
    
    
    Other
    
    
    TotalPreferred Stock
    
    
    Common Stock
    
    
    Common Stock
    
    
    Paid-in
    
    
    Accumulated
    
    
    Comprehensive
    
    
    Stockholders(in thousands, except share data)
    
    Shares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Capital
    
    
    Deficit
    
    
    Loss
    
    
    DeficitBalance at January 1, 2007
    
    
    5,393,252
    
    
    $
    54
    
    
    
    305,781,515
    
    
    $
    3,058
    
    
    
    
    
    
    $
    
    
    
    $
    3,093,894
    
    
    $
    (3,498,476
    )
    
    $
    3,590
    
    
    $
    (397,880
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (670,849
    )
    
    
    
    
    
    
    (670,849
    )Net loss attributable to noncontrolling interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11,532
    )
    
    
    
    
    
    
    (11,532
    )Other comprehensive income:Unrealized gain on available-for-sale
securities, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    125
    
    
    
    125Realized gain on available-for-sale
securities, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    125
    
    
    
    125Foreign currency translation adjustment,
net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,126
    
    
    
    5,126Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (677,005
    )Sale of shares of Class A common stock
    
    
    
    
    
    
    
    
    
    
    27,412
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    301
    
    
    
    
    
    
    
    
    
    
    
    302Issuance of shares of Class A common stock
to third party
    
    
    
    
    
    
    
    
    
    
    1,853,412
    
    
    
    19
    
    
    
    
    
    
    
    
    
    
    
    21,981
    
    
    
    
    
    
    
    
    
    
    
    22,000Issuance of shares of Class A common stock
from redemption of warrants
    
    
    
    
    
    
    
    
    
    
    152,898
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    31
    
    
    
    
    
    
    
    
    
    
    
    32Issuance of shares of Class A common stock
through share-based payment plans
    
    
    
    
    
    
    
    
    
    
    1,086,871
    
    
    
    10
    
    
    
    
    
    
    
    
    
    
    
    7,900
    
    
    
    
    
    
    
    
    
    
    
    7,910Issuance of shares of restricted Class A
common stock, net of cancellations
    
    
    
    
    
    
    
    
    
    
    8,100,285
    
    
    
    81
    
    
    
    
    
    
    
    
    
    
    
    (81
    )
    
    
    
    
    
    
    
    
    
    
    Non-cash share-based payment expense and
amortization of restricted stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    64,199
    
    
    
    
    
    
    
    
    
    
    
    64,199Restricted shares withheld for tax
upon vesting
    
    
    
    
    
    
    
    
    
    
    (317,911
    )
    
    
    (3
    )
    
    
    
    
    
    
    
    
    
    
    (3,858
    )
    
    
    
    
    
    
    
    
    
    
    (3,861
    )Balance at December 31, 2007
    
    
    5,393,252
    
    
    $
    54
    
    
    
    316,684,482
    
    
    $
    3,167
    
    
    
    
    
    
    $
    
    
    
    $
    3,184,367
    
    
    $
    (4,180,857
    )
    
    $
    8,966
    
    
    $
    (984,303
    )Predecessor entityNet loss for the period January 1, 2008
through July 31, 2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (315,015
    )
    
    
    
    
    
    
    (315,015
    )Net loss attributable to noncontrolling interest
for the
period January 1, 2008 through July 31, 2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,443
    )
    
    
    
    
    
    
    (7,443
    )Other comprehensive loss:Unrealized loss on available-for-sale
securities, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (910
    )
    
    
    (910
    )Foreign currency translation adjustment,
net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (277
    )
    
    
    (277
    )Total comprehensive loss for the period
January 1, 2008 through July 31, 2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (323,645
    )Issuance of shares of Class A common stock
from redemption of warrants
    
    
    
    
    
    
    
    
    
    
    1,251
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1Issuance of shares of Class A common stock
through share-based payment plans
    
    
    
    
    
    
    
    
    
    
    156,431
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    974
    
    
    
    
    
    
    
    
    
    
    
    975Issuance of shares of restricted Class A
common stock, net of cancellations
    
    
    
    
    
    
    
    
    
    
    2,966,507
    
    
    
    29
    
    
    
    
    
    
    
    
    
    
    
    (29
    )
    
    
    
    
    
    
    
    
    
    
    Non-cash share-based payment expense and
amortization of restricted stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    34,485
    
    
    
    
    
    
    
    
    
    
    
    34,485Restricted shares withheld for tax upon
vesting
    
    
    
    
    
    
    
    
    
    
    (198,282
    )
    
    
    (2
    )
    
    
    
    
    
    
    
    
    
    
    (2,532
    )
    
    
    
    
    
    
    
    
    
    
    (2,534
    )Acquisition transactions
    
    
    (5,393,252
    )
    
    
    (54
    )
    
    
    (319,610,389
    )
    
    
    (3,196
    )
    
    
    100
    
    
    
    
    
    
    
    2,619,098
    
    
    
    4,503,315
    
    
    
    (7,779
    )
    
    
    7,111,384Balance at July 31, 2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    
    
    
    
    100
    
    
    $
    
    
    
    $
    5,836,363
    
    
    $
    
    
    
    $
    
    
    
    $
    5,836,363
   F-6




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##### Table of Contents



XM SATELLITE RADIO HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS DEFICIT AND COMPREHENSIVE LOSS
 Series A
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    AccumulatedConvertible
    
    
    Class A
    
    
    
    
    
    
    
    
    
    
    Additional
    
    
    
    
    
    
    Other
    
    
    TotalPreferred Stock
    
    
    Common Stock
    
    
    Common Stock
    
    
    Paid-in
    
    
    Accumulated
    
    
    Comprehensive
    
    
    Stockholders(in thousands, except share data)
    
    Shares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Capital
    
    
    Deficit
    
    
    Loss
    
    
    DeficitSuccessor entityBalance at August 1, 2008
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    100
    
    
    $
    
    
    
    $
    5,836,363
    
    
    $
    
    
    
    $
    
    
    
    $
    5,836,363Net loss for the period August 1, 2008
through December 31, 2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,438,185
    )
    
    
    
    
    
    
    (6,438,185
    )Other comprehensive loss:Unrealized loss on available-for-sale
securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,040
    )
    
    
    (1,040
    )Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,831
    )
    
    
    (6,831
    )Total comprehensive loss for the period
August 1, 2008 through December 31, 2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,446,056
    )Contributed capital
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (701
    )
    
    
    
    
    
    
    
    
    
    
    (701
    )Compensation in connection with the issuance
of share-based awards
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    34,924
    
    
    
    
    
    
    
    
    
    
    
    34,924Restricted shares withheld for tax upon vesting
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (84
    )
    
    
    
    
    
    
    
    
    
    
    (84
    )Balance at December 31, 2008
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    100
    
    
    $
    
    
    
    $
    5,870,502
    
    
    $
    (6,438,185
    )
    
    $
    (7,871
    )
    
    $
    (575,554
    )Net loss  XM Satellite Radio Holdings Inc.
and Subsidiaries
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (246,830
    )
    
    
    
    
    
    
    (246,830
    )Other comprehensive income:Unrealized gain on available-for-sale
securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    473
    
    
    
    473Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    817
    
    
    
    817Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (245,540
    )Non-cash capital contributions from SIRIUS XM
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    119,198
    
    
    
    
    
    
    
    
    
    
    
    119,198Balance at December 31, 2009
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    100
    
    
    $
    
    
    
    $
    5,989,700
    
    
    $
    (6,685,015
    )
    
    $
    (6,581
    )
    
    $
    (701,896
    )
   F-7




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##### Table of Contents



XM SATELLITE RADIO HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
 Successor Entity
    
    
    
    Predecessor EntityYear Ended
    
    
    August 1, 2008
    
    
    
    January 1, 2008
    
    
    Year EndedDecember 31,
    
    
    Through
    
    
    
    Through
    
    
    December 31,(in thousands)
    
    2009
    
    
    December 31, 2008
    
    
    
    July 31, 2008
    
    
    2007Cash flows from operating activities:Net loss  XM Satellite Radio Holdings Inc. and Subsidiaries
    
    $
    (246,830
    )
    
    $
    (6,438,185
    )
    
    
    $
    (322,458
    )
    
    $
    (682,381
    )Adjustments to reconcile net loss to net cash provided by (used in)
operating activities:Depreciation and amortization
    
    
    191,781
    
    
    
    94,310
    
    
    
    
    88,749
    
    
    
    187,196Impairment of goodwill
    
    
    
    
    
    
    6,601,046
    
    
    
    
    
    
    
    
    Non-cash interest expense
    
    
    82,357
    
    
    
    23,674
    
    
    
    
    7,023
    
    
    
    9,733Provision for doubtful accounts
    
    
    15,649
    
    
    
    7,529
    
    
    
    
    8,523
    
    
    
    12,740Amortization of deferred income related to equity method investment
    
    
    (2,776
    )
    
    
    (1,156
    )
    
    
    
    (5,829
    )
    
    
    (9,993
    )Loss on investments
    
    
    7,026
    
    
    
    25,762
    
    
    
    
    13,010
    
    
    
    56,156Loss on extinguishment of debt and credit facilities, net
    
    
    115,884
    
    
    
    
    
    
    
    
    
    
    
    
    3,693Restructuring, impairments and related costs
    
    
    26,411
    
    
    
    
    
    
    
    
    
    
    
    
    Share-based payment expense
    
    
    35,695
    
    
    
    17,974
    
    
    
    
    34,485
    
    
    
    86,199(Gain) loss on change in value of embedded derivatives
    
    
    33,534
    
    
    
    (322,347
    )
    
    
    
    
    
    
    
    Deferred income taxes
    
    
    2,463
    
    
    
    963
    
    
    
    
    1,512
    
    
    
    (939
    )Other non-cash purchase price adjustments
    
    
    (202,054
    )
    
    
    (68,106
    )
    
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    1,643
    
    
    
    
    7,412
    
    
    
    11,524Changes in operating assets and liabilities:Accounts receivable
    
    
    (22,964
    )
    
    
    (12,832
    )
    
    
    
    7,597
    
    
    
    (14,054
    )Inventory
    
    
    473
    
    
    
    (1,273
    )
    
    
    
    5,558
    
    
    
    5,718Related party assets
    
    
    23,052
    
    
    
    758
    
    
    
    
    2,050
    
    
    
    3,448Prepaid expenses and other current assets
    
    
    1,115
    
    
    
    (8,800
    )
    
    
    
    (20,599
    )
    
    
    (3,480
    )Restricted investments
    
    
    
    
    
    
    
    
    
    
    
    (120,000
    )
    
    
    Other long-term assets
    
    
    61,726
    
    
    
    (10,346
    )
    
    
    
    378
    
    
    
    (3,265
    )Accounts payable and accrued expenses
    
    
    (51,549
    )
    
    
    (9,310
    )
    
    
    
    (30,477
    )
    
    
    73,676Accrued interest
    
    
    551
    
    
    
    21,158
    
    
    
    
    12,558
    
    
    
    (1,655
    )Deferred revenue
    
    
    90,532
    
    
    
    32,526
    
    
    
    
    47,599
    
    
    
    91,834Related party liabilities
    
    
    81,953
    
    
    
    11,627
    
    
    
    
    6,557
    
    
    
    19,287Other long-term liabilities
    
    
    28,804
    
    
    
    40,624
    
    
    
    
    5,266
    
    
    
    (167
    )Net cash provided by (used in) operating activities
    
    
    272,833
    
    
    
    7,239
    
    
    
    
    (251,086
    )
    
    
    (154,730
    )Cash flows from investing activities:Additions to property and equipment
    
    
    (53,465
    )
    
    
    (13,447
    )
    
    
    
    (30,843
    )
    
    
    (133,338
    )Purchase of restricted and other investments
    
    
    
    
    
    
    
    
    
    
    
    (34,825
    )
    
    
    Sale of restricted and other investments
    
    
    
    
    
    
    25,400
    
    
    
    
    
    
    
    
    1,823Net cash (used in) provided by investing activities
    
    
    (53,465
    )
    
    
    11,953
    
    
    
    
    (65,668
    )
    
    
    (131,515
    )Cash flows from financing activities:Proceeds from exercise of warrants and stock options
    
    
    
    
    
    
    
    
    
    
    
    964
    
    
    
    8,244Long-term borrowings, net of costs
    
    
    388,399
    
    
    
    531,743
    
    
    
    
    1,023,190
    
    
    
    284,238Related party long-term borrowings, net of costs
    
    
    93,818
    
    
    
    
    
    
    
    
    
    
    
    
    Payment of premiums on redemption of debt
    
    
    (17,075
    )
    
    
    (18,693
    )
    
    
    
    
    
    
    
    (3,693
    )Payments to noncontrolling interest
    
    
    
    
    
    
    (61,880
    )
    
    
    
    (6,897
    )
    
    
    (9,486
    )Repayment of long-term borrowings
    
    
    (579,095
    )
    
    
    (1,083,143
    )
    
    
    
    (35,210
    )
    
    
    (52,544
    )Repayment of long-term related party borrowings
    
    
    (100,000
    )
    
    
    
    
    
    
    
    
    
    
    
    Other, net
    
    
    
    
    
    
    
    
    
    
    
    (2,458
    )
    
    
    (2,044
    )Net cash (used in) provided by financing activities
    
    
    (213,953
    )
    
    
    (631,973
    )
    
    
    
    979,589
    
    
    
    224,715Net increase (decrease) in cash and cash equivalents
    
    
    5,415
    
    
    
    (612,781
    )
    
    
    
    662,835
    
    
    
    (61,530
    )Cash and cash equivalents at beginning of period
    
    
    206,740
    
    
    
    819,521
    
    
    
    
    156,686
    
    
    
    218,216Cash and cash equivalents at end of period
    
    $
    212,155
    
    
    $
    206,740
    
    
    
    $
    819,521
    
    
    $
    156,686
 Successor Entity
    
    
    
    Predecessor EntityYear Ended
    
    
    August 1, 2008
    
    
    
    January 1, 2008
    
    
    Year EndedDecember 31,
    
    
    Through
    
    
    
    Through
    
    
    December 31,2009
    
    
    December 31, 2008
    
    
    
    July 31, 2008
    
    
    2007Supplemental Disclosure of Cash and Non-Cash Flow InformationCash paid during the period for:Interest, net of amounts capitalized
    
    $
    198,662
    
    
    $
    62,360
    
    
    
    $
    54,626
    
    
    $
    108,742Non-cash investing and financing activities:Non-cash capital contributions from SIRIUS XM
    
    
    119,198
    
    
    
    
    
    
    
    
    
    
    
    
    Property acquired through capital leases
    
    
    1,208
    
    
    
    
    
    
    
    
    4,465
    
    
    
    9,453Release of restricted investments
    
    
    120,000
    
    
    
    
    
    
    
    
    
    
    
    
    
   F-8




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##### Table of Contents



XM SATELLITE RADIO HOLDINGS INC. AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  (1) Business
         
    
    the ownership by XM Holdings of the corporate headquarters and data center buildings and
the lease of these buildings to XM;
 
    
    XM-1, XM-2, and the transponders of XM-3 and XM-4 are owned by XM; and XM-5 and the bus
portions of XM-3 and XM-4 are owned by XM Holdings;
 
    
    the presence at XM Holdings of additional indebtedness, primarily the 10% Senior PIK
Secured Notes due 2011 (of which $58,800 is held by XM) and $227,515 of 14.75% PIK Notes
due 2014 issued by XM Holdings to XM in December 2009, neither of which is guaranteed by
XM;
 
    
    the investment by XM Holdings in XM Canada (including related revenue and deferred
income); and
 
    
    the existence of additional cash balances at XM Holdings.
  F-9




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##### Table of Contents



XM SATELLITE RADIO HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
  
    
    additional rent, less depreciation and amortization expense and less other income, in
each case principally related to XMs rental of its corporate headquarters and data center
buildings from XM Holdings, which are intercompany transactions that have been eliminated
in XM Holdings consolidated financial statements;
 
    
    less interest expense, principally related to the additional indebtedness at XM
Holdings, and gains and losses on embedded derivatives;
 
    
    less revenue associated with the amortization of deferred income and equity in losses
from XM Holdings investment in XM Canada;
 
    
    no gains or losses on XM Holdings investment in XM Canada; and
 
    
    less interest income because of additional cash balances at XM Holdings.
 (2) Principles of Consolidation and Basis of Presentation
 Principles of Consolidation
  Basis of Presentation
    (3) Summary of Significant Accounting Policies
 Use of Estimates
    F-10




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##### Table of Contents



XM SATELLITE RADIO HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
 Recent Accounting Pronouncements
  Accounting for Own-Share Lending Arrangements in Contemplation of Convertible Debt
Issuance
 Transition and Open Effective Date Information
 Subsequent Events
 The FASB Accounting Standards Codification
and the Hierarchy of Generally Accepted Accounting Principles
 Revenue Recognition
        F-11




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##### Table of Contents



XM SATELLITE RADIO HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
  Programming Costs
  Advertising Costs
  Stock-Based Compensation
 Compensation  Stock Compensation
  Equity
    F-12




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##### Table of Contents



XM SATELLITE RADIO HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
 Subscriber Acquisition Costs
   Guarantees
 Research & Development Costs
  Income Taxes
  Income Taxes,
  Cash and Cash Equivalents
   F-13




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##### Table of Contents



XM SATELLITE RADIO HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
 Accounts Receivable
   December 31,2009
    
    
    2008Gross accounts receivable
    
    $
    65,399
    
    
    $
    58,926Allowance for doubtful accounts
    
    
    (5,357
    )
    
    
    (6,199
    )Total accounts receivable, net
    
    $
    60,042
    
    
    $
    52,727
 Inventory
   December 31,2009
    
    
    2008Raw materials
    
    $
    5,002
    
    
    $
    5,781Finished goods
    
    
    4,975
    
    
    
    6,898Allowance for obsolescence
    
    
    (5,961
    )
    
    
    (8,190
    )Total inventory, net
    
    $
    4,016
    
    
    $
    4,489
 Investments
 Marketable
Securities
  Restricted Investments
 Equity Method Investments
  F-14




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##### Table of Contents



XM SATELLITE RADIO HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
 Cost Method Investments
 Fair Value Measurements and Disclosures,
  Property and Equipment
  Satellite system
    
    2 - 15 yearsTerrestrial repeater network
    
    3 - 15 yearsBroadcast studio equipment
    
    3 - 15 yearsCapitalized software and hardware
    
    3 - 7 yearsSatellite telemetry, tracking and control facilities
    
    3, 4, 11 or 15 yearsFurniture, fixtures, equipment and other
    
    2 - 7 yearsBuilding and improvements
    
    14 - 47 yearsLeasehold improvements
    
    Lesser of useful life or remaining lease term
  Goodwill and Other Intangible Assets
   Property, Plant and Equipment/Overall/Subsequent Measurement
 Restructuring Accruals
   F-15




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##### Table of Contents



XM SATELLITE RADIO HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
 Reclassifications
  Allocations
  (4) Intangible Assets
  December 31, 2009
    
    
    December 31, 2008Gross
    
    
    
    
    
    Net
    
    
    Gross
    
    
    
    
    
    NetWeighted Average
    
    
    Carrying
    
    
    Accumulated
    
    
    Carrying
    
    
    Carrying
    
    
    Accumulated
    
    
    CarryingUseful Lives
    
    
    Value
    
    
    Amortization
    
    
    Value
    
    
    Value
    
    
    Amortization
    
    
    ValueIndefinite life intangible assetsFCC licenses
    
    Indefinite
    
    $
    2,000,000
    
    
    $
    
    
    
    $
    2,000,000
    
    
    $
    2,000,000
    
    
    $
    
    
    
    $
    2,000,000Trademark
    
    Indefinite
    
    
    250,000
    
    
    
    
    
    
    
    250,000
    
    
    
    250,000
    
    
    
    
    
    
    
    250,000Definite life intangible assetsSubscriber relationships
    
    9 years
    
    $
    380,000
    
    
    $
    (91,186
    )
    
    $
    288,814
    
    
    $
    380,000
    
    
    $
    (29,226
    )
    
    $
    350,774Proprietary software
    
    6 years
    
    
    16,552
    
    
    
    (6,823
    )
    
    
    9,729
    
    
    
    16,552
    
    
    
    (2,285
    )
    
    
    14,267Developed technology
    
    10 years
    
    
    2,000
    
    
    
    (283
    )
    
    
    1,717
    
    
    
    2,000
    
    
    
    (83
    )
    
    
    1,917Licensing agreements
    
    9.1 years
    
    
    75,000
    
    
    
    (13,906
    )
    
    
    61,094
    
    
    
    75,000
    
    
    
    (4,090
    )
    
    
    70,910Leasehold interests
    
    7.4 years
    
    
    132
    
    
    
    (25
    )
    
    
    107
    
    
    
    908
    
    
    
    (105
    )
    
    
    803Total intangible assets
    
    
    
    
    
    $
    2,723,684
    
    
    $
    (112,223
    )
    
    $
    2,611,461
    
    
    $
    2,724,460
    
    
    $
    (35,789
    )
    
    $
    2,688,671
 Indefinite Life Intangible Assets
    .
 Definite Life Intangible Assets
   F-16




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##### Table of Contents



XM SATELLITE RADIO HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
  Year ending December 31,
    
    Amount2010
    
    $
    65,9162011
    
    
    58,8502012
    
    
    53,4202013
    
    
    47,0972014
    
    
    38,619Thereafter
    
    
    97,559Total intangibles, net
    
    $
    361,461
 (5) Subscriber Revenue
   Successor Entity
    
    
    
    Predecessor EntityYear Ended
    
    
    August 1, 2008
    
    
    
    January 1, 2008
    
    
    Year EndedDecember 31,
    
    
    Through
    
    
    
    Through
    
    
    December 31,2009
    
    
    December 31, 2008
    
    
    
    July 31, 2008
    
    
    2007Subscription fees
    
    $
    1,188,195
    
    
    $
    472,800
    
    
    
    $
    659,775
    
    
    $
    1,016,720Activation fees
    
    
    3,488
    
    
    
    319
    
    
    
    
    11,855
    
    
    
    19,354Effect of rebates
    
    
    (280
    )
    
    
    (662
    )
    
    
    
    (760
    )
    
    
    (2,298
    )Total subscriber revenue
    
    $
    1,191,403
    
    
    $
    472,457
    
    
    
    $
    670,870
    
    
    $
    1,033,776
 (6) Interest Costs
  Successor Entity
    
    
    
    Predecessor EntityYear Ended
    
    
    August 1, 2008
    
    
    
    January 1, 2008
    
    
    Year EndedDecember 31,
    
    
    Through
    
    
    
    Through
    
    
    December 31,2009
    
    
    December 31, 2008
    
    
    
    July 31, 2008
    
    
    2007Interest costs charged to expense
    
    $
    289,845
    
    
    $
    107,155
    
    
    
    $
    73,937
    
    
    $
    116,605Interest costs capitalized
    
    
    33,508
    
    
    
    10,737
    
    
    
    
    6,852
    
    
    
    7,054Total interest costs incurred
    
    $
    323,353
    
    
    $
    117,892
    
    
    
    $
    80,789
    
    
    $
    123,659
   F-17




---



##### Table of Contents



XM SATELLITE RADIO HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
 (7) Property and Equipment
  December 31,2009
    
    
    2008Satellite system
    
    $
    490,126
    
    
    $
    490,126Terrestrial repeater network
    
    
    41,604
    
    
    
    41,850Leasehold improvements
    
    
    7,250
    
    
    
    6,762Broadcast studio equipment
    
    
    7,957
    
    
    
    7,804Capitalized software and hardware
    
    
    53,772
    
    
    
    53,986Satellite telemetry, tracking and control facilities
    
    
    32,877
    
    
    
    33,542Furniture, fixtures, equipment and other
    
    
    27,418
    
    
    
    26,076Land
    
    
    38,100
    
    
    
    38,100Building
    
    
    53,851
    
    
    
    53,887Construction in progress
    
    
    223,083
    
    
    
    181,856Total property and equipment
    
    
    976,038
    
    
    
    933,989Accumulated depreciation and amortization
    
    
    (176,633
    )
    
    
    (59,401
    )Property and equipment, net
    
    $
    799,405
    
    
    $
    874,588
  Satellites
   (8) Related Party Transactions
  Related party
    
    
    Related party
    
    
    Related party
    
    
    Related party
    
    
    Related partycurrent assets
    
    
    long-term assets
    
    
    current liabilities
    
    
    long-term liabilities
    
    
    long-term debtDecember 31,
    
    
    December 31,
    
    
    December 31,
    
    
    December 31,
    
    
    December 31,2009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Liberty Media
    
    $
    
    
    
    $
    
    
    
    $
    646
    
    
    $
    
    
    
    $
    4,589
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    157,183
    
    
    $
    XM Canada
    
    
    1,011
    
    
    
    1,844
    
    
    
    24,429
    
    
    
    12,061
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    General Motors
    
    
    99,554
    
    
    
    104,575
    
    
    
    85,364
    
    
    
    116,296
    
    
    
    93,107
    
    
    
    63,023
    
    
    
    17,508
    
    
    
    
    
    
    
    
    
    
    
    American Honda
    
    
    2,914
    
    
    
    2,194
    
    
    
    
    
    
    
    
    
    
    
    3,841
    
    
    
    4,190
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    SIRIUS
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    80,381
    
    
    
    16,717
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    103,479
    
    
    $
    108,613
    
    
    $
    110,439
    
    
    $
    128,357
    
    
    $
    181,918
    
    
    $
    83,930
    
    
    $
    17,508
    
    
    $
    
    
    
    $
    157,183
    
    
    $
    
 Liberty Media
   F-18




---



##### Table of Contents



XM SATELLITE RADIO HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
 Investment Agreement
   Loan Investments
    December 31,2009
    
    
    200811.25% Senior Secured Notes due 2013
    
    $
    87,000
    
    
    $
    13% Senior Notes due 2013
    
    
    76,000
    
    
    
    7% Exchangeable Senior Subordinated Notes due 2014
    
    
    11,000
    
    
    
    Total
    
    $
    174,000
    
    
    $
    
  XM Canada
 Revenue
Recognition
     F-19




---



##### Table of Contents



XM SATELLITE RADIO HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -Continued
  Successor Entity
    
    
    
    Predecessor EntityYear Ended
    
    
    August 1, 2008
    
    
    
    January 1, 2008
    
    
    Year EndedDecember 31,
    
    
    Through
    
    
    
    Through
    
    
    December 31,2009
    
    
    December 31, 2008
    
    
    
    July 31, 2008
    
    
    2007Amortization of XM Canada deferred income
    
    $
    2,776
    
    
    $
    1,156
    
    
    
    $
    5,829
    
    
    $
    9,993Subscriber and activation fees royalties
    
    
    11,603
    
    
    
    97
    
    
    
    
    422
    
    
    
    333Licensing fee revenue
    
    
    6,000
    
    
    
    2,500
    
    
    
    
    3,500
    
    
    
    4,875Advertising reimbursements
    
    
    1,067
    
    
    
    366
    
    
    
    
    833
    
    
    
    1,083Total revenue from XM Canada
    
    $
    21,446
    
    
    $
    4,119
    
    
    
    $
    10,584
    
    
    $
    16,284
 General Motors and American Honda
     Successor Entity
    
    
    
    Predecessor EntityYear Ended
    
    
    August 1, 2008
    
    
    
    January 1, 2008
    
    
    Year EndedDecember 31,
    
    
    Through
    
    
    
    Through
    
    
    December 31,2009
    
    
    December 31, 2008
    
    
    
    July 31, 2008
    
    
    2007General Motors
    
    $
    31,037
    
    
    $
    16,803
    
    
    
    $
    25,394
    
    
    $
    36,047American Honda
    
    
    12,254
    
    
    
    7,504
    
    
    
    
    10,599
    
    
    
    18,385Total
    
    $
    43,291
    
    
    $
    24,307
    
    
    
    $
    35,993
    
    
    $
    54,432
  Successor Entity
    
    
    
    Predecessor EntityAugust 1, 2008
    
    
    
    January 1, 2008Year Ended
    
    
    Through
    
    
    
    Through
    
    
    Year EndedDecember 31, 2009
    
    
    December 31, 2008
    
    
    
    July 31, 2008
    
    
    December 31, 2007General
    
    
    American
    
    
    General
    
    
    American
    
    
    
    General
    
    
    American
    
    
    General
    
    
    AmericanMotors
    
    
    Honda
    
    
    Motors
    
    
    Honda
    
    
    
    Motors
    
    
    Honda
    
    
    Motors
    
    
    HondaSales and marketing
    
    $
    31,595
    
    
    $
    500
    
    
    $
    16,115
    
    
    $
    815
    
    
    
    $
    28,377
    
    
    $
    1,575
    
    
    $
    47,067
    
    
    $
    1,672Revenue share and royalties
    
    
    58,992
    
    
    
    6,541
    
    
    
    36,305
    
    
    
    2,051
    
    
    
    
    79,869
    
    
    
    1,901
    
    
    
    111,169
    
    
    
    843Subscriber acquisition costs
    
    
    34,895
    
    
    
    5,397
    
    
    
    30,975
    
    
    
    3,433
    
    
    
    
    88,300
    
    
    
    4,675
    
    
    
    145,338
    
    
    
    6,003Customer service and billing
    
    
    268
    
    
    
    
    
    
    
    119
    
    
    
    
    
    
    
    
    90
    
    
    
    
    
    
    
    230
    
    
    
    Interest expense, net of amounts capitalized
    
    
    4,644
    
    
    
    
    
    
    
    51
    
    
    
    
    
    
    
    
    488
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    130,394
    
    
    $
    12,438
    
    
    $
    83,565
    
    
    $
    6,299
    
    
    
    $
    197,124
    
    
    $
    8,151
    
    
    $
    303,804
    
    
    $
    8,518
  F-20




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##### Table of Contents



XM SATELLITE RADIO HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
 SIRIUS
    (9) Investments
  December 31,2009
    
    
    2008Investment in XM Canada
    
    $
    2,390
    
    
    $
    8,873Investment in XM Canada debentures
    
    
    2,970
    
    
    
    2,542Auction rate certificates
    
    
    8,556
    
    
    
    7,985Restricted investments
    
    
    250
    
    
    
    120,250Total investments
    
    $
    14,166
    
    
    $
    139,650
 XM Canada
    Successor Entity
    
    
    
    Predecessor EntityYear Ended
    
    
    August 1, 2008
    
    
    
    January 1, 2008
    
    
    Year EndedDecember 31,
    
    
    Through
    
    
    
    Through
    
    
    December 31,2009
    
    
    December 31, 2008
    
    
    
    July 31, 2008
    
    
    2007Share of XM Canada net loss
    
    $
    (2,292
    )
    
    $
    (9,309
    )
    
    
    $
    (10,385
    )
    
    $
    (16,491
    )Impairment of XM Canada
    
    
    (4,734
    )
    
    
    (16,453
    )
    
    
    
    
    
    
    
    (35,824
    )Impairment of WorldSpace (1)
    
    
    
    
    
    
    
    
    
    
    
    (2,625
    )
    
    
    (3,841
    )Total
    
    $
    (7,026
    )
    
    $
    (25,762
    )
    
    
    $
    (13,010
    )
    
    $
    (56,156
    )
 
 (1)
    
    In 2008, WorldSpace, Inc. filed for reorganization under the Bankruptcy Code and we wrote
off our investment.   F-21




---



##### Table of Contents



XM SATELLITE RADIO HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
  Auction Rate Certificates
  Restricted Investments
  (10) Fair Value
  Fair Value Measurements UsingQuoted Prices in Active
    
    
    Significant Other
    
    
    SignificantMarkets for Identical
    
    
    Observable
    
    
    Unobservable
    
    
    Carrying(in thousands)
    
    Assets (Level 1)
    
    
    Inputs (Level 2)
    
    
    Inputs (Level 3)
    
    
    ValueAssets:Auction rate securities
    
    
    N/A
    
    
    
    N/A
    
    
    $
    8,556
    
    
    $
    8,556Debentures
and embedded derivatives
    
    
    N/A
    
    
    
    N/A
    
    
    
    2,970
    
    
    
    2,970Total assets
    
    
    
    
    
    
    
    
    
    $
    11,526
    
    
    $
    11,526Liabilities:Debt-related embedded derivatives
    
    $
    
    
    
    $
    
    
    
    $
    56,192
    
    
    $
    56,192Total liabilities
    
    $
    
    
    
    $
    
    
    
    $
    56,192
    
    
    $
    56,192
  Fair Value Measurements Using Significant Unobservable Inputs (Level 3)Debentures and
    
    
    Debt-RelatedAuction Rate Securities
    
    
    Embedded Derivatives
    
    
    Embedded DerivativesBalance at December 31, 2008
    
    $
    7,985
    
    
    $
    2,542
    
    
    $
    22,658Total gains and losses (realized /unrealized)
    
    
    
    
    
    
    142
    
    
    
    33,534Included in other comprehensive income
    
    
    571
    
    
    
    286
    
    
    
    Balance at December 31, 2009
    
    $
    8,556
    
    
    $
    2,970
    
    
    $
    56,192
   F-22




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##### Table of Contents



XM SATELLITE RADIO HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
  (11) Debt
  ConversionPrice (per
    
    
    December 31,SIRIUS share)
    
    
    2009
    
    
    200810% Convertible Senior Notes due 2009 (a)
    
    $
    10.87
    
    
    $
    
    
    
    $
    400,000Less: discount
    
    
    
    
    
    
    
    
    
    
    (17,367
    )10% Senior Secured Discount Convertible Notes due 2009 (b)
    
    $
    0.69
    
    
    
    
    
    
    
    33,249Less: discount
    
    
    
    
    
    
    
    
    
    
    (5,471
    )10% Senior PIK Secured Notes due 2011 (c)
    
    
    N/A
    
    
    
    113,685
    
    
    
    Less: discount
    
    
    
    
    
    
    (7,711
    )
    
    
    11.25% Senior Secured Notes due 2013 (d)
    
    
    N/A
    
    
    
    525,750
    
    
    
    Less: discount
    
    
    
    
    
    
    (32,259
    )
    
    
    13% Senior Notes due 2013 (e)
    
    
    N/A
    
    
    
    778,500
    
    
    
    778,500Less: discount
    
    
    
    
    
    
    (76,602
    )
    
    
    (90,018
    )9.75% Senior Notes due 2014 (f)
    
    
    N/A
    
    
    
    5,260
    
    
    
    5,2607% Exchangeable Senior Subordinated Notes due 2014 (g)
    
    $
    1.875
    
    
    
    550,000
    
    
    
    550,000Less: discount
    
    
    
    
    
    
    (256,205
    )
    
    
    (280,842
    )Senior Secured Term Loan due 2009
    
    
    N/A
    
    
    
    
    
    
    
    100,000Senior Secured Revolving Credit Facility due 2009
    
    
    N/A
    
    
    
    
    
    
    
    250,000Add: premium
    
    
    
    
    
    
    
    
    
    
    151Other debt:Capital leases
    
    
    N/A
    
    
    
    14,304
    
    
    
    23,215Embedded derivatives (h)
    
    
    
    
    
    
    56,192
    
    
    
    22,658Total debt
    
    
    
    
    
    
    1,670,914
    
    
    
    1,769,335Less: current maturities
    
    
    
    
    
    
    11,382
    
    
    
    355,739Total long-term
    
    
    
    
    
    
    1,659,532
    
    
    
    1,413,596Less: related party
    
    
    
    
    
    
    157,183
    
    
    
    Total long-term, excluding related party
    
    
    
    
    
    $
    1,502,349
    
    
    $
    1,413,596
 (a) 10% Convertible Senior Notes due 2009
     (b) 10% Senior Secured Discount Convertible Notes due 2009
   F-23




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##### Table of Contents



XM SATELLITE RADIO HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
 (c) 10% Senior PIK Secured Notes due 2011
     (d) 11.25% Senior Secured Notes due 2013
   (e) 13% Senior Notes due 2013
  (f) 9.75% Senior Notes due 2014
   (g) 7% Exchangeable Senior Subordinated Notes due 2014
    F-24




---



##### Table of Contents



XM SATELLITE RADIO HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
 (h) Embedded Derivatives
  Accounting for Hedging and Derivative Instruments
  Expired Credit Arrangements
 Amended and Restated Credit Agreement due 2011
   Second-Lien Credit Agreement
   Covenants and Restrictions
    F-25




---



##### Table of Contents



XM SATELLITE RADIO HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
 (12) Benefit Plans
  Predecessor EntityJanuary 1, 2008
    
    Year EndedThrough
    
    December 31,July 31, 2008
    
    2007Risk-free interest rate
    
    3.36%
    
    3.45% - 4.92%Expected life of options  years
    
    4.36
    
    4.13 - 6.00Expected stock price volatility
    
    58%
    
    41% - 60%Expected dividend yield
    
    N/A
    
    N/A
  Weighted-
    
    
    Weighted-AverageAverage
    
    
    Remaining
    
    
    AggregateExercise
    
    
    Contractual Term
    
    
    IntrinsicShares
    
    
    Price
    
    
    (Years)
    
    
    ValuePredecessor Entity:Outstanding, December 31, 2006
    
    
    72,882
    
    
    $
    4.00Granted
    
    
    2,841
    
    
    $
    2.74Exercised
    
    
    (5,000
    )
    
    $
    1.55Forfeited, cancelled or expired
    
    
    (2,688
    )
    
    $
    5.16Outstanding, December 31, 2007
    
    
    68,035
    
    
    $
    4.08Granted
    
    
    1,408
    
    
    $
    2.41Exercised
    
    
    (719
    )
    
    $
    1.32Forfeited, cancelled or expired
    
    
    (1,013
    )
    
    $
    3.80Outstanding, July 31, 2008
    
    
    67,711
    
    
    $
    4.08Successor Entity:Granted
    
    
    
    
    
    $
    Exercised
    
    
    
    
    
    $
    Forfeited, cancelled or expired
    
    
    (333
    )
    
    $
    3.86Outstanding, December 31, 2008
    
    
    67,378
    
    
    $
    4.09Granted
    
    
    
    
    
    $
    Exercised
    
    
    
    
    
    $
    Forfeited, cancelled or expired
    
    
    (27,448
    )
    
    $
    4.00Outstanding, December 31, 2009
    
    
    39,930
    
    
    $
    4.15
    
    
    
    4.26
    
    
    $
    Exercisable, December 31, 2009
    
    
    38,943
    
    
    $
    4.19
    
    
    
    4.17
    
    
    $
    
    F-26




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##### Table of Contents



XM SATELLITE RADIO HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
  Weighted-AverageGrant DateShares
    
    
    Fair ValuePredecessor Entity:Nonvested, December 31, 2006
    
    
    15,673
    
    
    $
    4.19Granted
    
    
    22,224
    
    
    
    2.58Vested
    
    
    (4,660
    )
    
    $
    4.61Forfeited
    
    
    (899
    )
    
    $
    3.39Nonvested, December 31, 2007
    
    
    32,338
    
    
    $
    3.05Granted
    
    
    14,447
    
    
    $
    2.79Vested
    
    
    (12,613
    )
    
    $
    3.06Forfeited
    
    
    (833
    )
    
    $
    2.81Non-Vested, July 31, 2008
    
    
    33,339
    
    
    $
    2.93Successor Entity:Granted
    
    
    
    
    
    
    Vested
    
    
    (15,342
    )
    
    $
    2.97Forfeited
    
    
    (1,898
    )
    
    $
    3.04Nonvested, December 31, 2008
    
    
    16,099
    
    
    $
    2.87Granted
    
    
    
    
    
    
    Vested
    
    
    (8,476
    )
    
    $
    2.98Forfeited
    
    
    (1,417
    )
    
    $
    2.89Nonvested, December 31, 2009
    
    
    6,206
    
    
    $
    2.71
     4 01(k) Savings Plans
  1 3
  F-27




---



##### Table of Contents



XM SATELLITE RADIO HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
 (13) Income Taxes
  Successor Entity
    
    
    
    Predecessor EntityYear Ended
    
    
    August 1, 2008
    
    
    
    January 1, 2008
    
    
    Year EndedDecember 31,
    
    
    Through
    
    
    
    Through
    
    
    December 31,2009
    
    
    December 31, 2008
    
    
    
    July 31, 2008
    
    
    2007Current taxes:Federal
    
    $
    
    
    
    $
    
    
    
    
    $
    
    
    
    $
    State
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Foreign
    
    
    249
    
    
    
    
    
    
    
    
    
    
    
    
    Total current taxes
    
    
    249
    
    
    
    
    
    
    
    
    
    
    
    
    Deferred taxes:Federal
    
    
    2,013
    
    
    
    828
    
    
    
    
    1,300
    
    
    
    (807
    )State
    
    
    201
    
    
    
    135
    
    
    
    
    212
    
    
    
    (132
    )Total deferred taxes
    
    
    2,214
    
    
    
    963
    
    
    
    
    1,512
    
    
    
    (939
    )Total income tax expense (benefit)
    
    $
    2,463
    
    
    $
    963
    
    
    
    $
    1,512
    
    
    $
    (939
    )
  Successor Entity
    
    
    
    Predecessor EntityYear Ended
    
    
    August 1, 2008
    
    
    
    January 1, 2008
    
    
    Year EndedDecember 31,
    
    
    Through
    
    
    
    Through
    
    
    December 31,2009
    
    
    December 31, 2008
    
    
    
    July 31, 2008
    
    
    2007Federal tax benefit, at statutory rate
    
    $
    (87,184
    )
    
    $
    (2,253,028
    )
    
    
    $
    (112,331
    )
    
    $
    (239,162
    )State income tax benefit, net of federal benefit
    
    
    (8,718
    )
    
    
    (225,303
    )
    
    
    
    (11,233
    )
    
    
    (23,916
    )Change in state tax rates
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Change in taxes resulting from permanent
differences, net
    
    
    
    
    
    
    2,544,726
    
    
    
    
    11,415
    
    
    
    1,181Other
    
    
    3,652
    
    
    
    1
    
    
    
    
    164
    
    
    
    Change in valuation allowance
    
    
    94,713
    
    
    
    (65,433
    )
    
    
    
    113,497
    
    
    
    260,958Income tax expense (benefit)
    
    $
    2,463
    
    
    $
    963
    
    
    
    $
    1,512
    
    
    $
    (939
    )
  F-28




---



##### Table of Contents



XM SATELLITE RADIO HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
  December 31,2009
    
    
    2008Deferred tax assets:Net operating loss carryforwards
    
    $
    1,508,362
    
    
    $
    1,143,292GM payments and liabilities
    
    
    311,235
    
    
    
    506,106Deferred revenue
    
    
    195,869
    
    
    
    214,258Severance accrual
    
    
    1,821
    
    
    
    17,237Accrued bonus
    
    
    
    
    
    
    4,276Expensed cost capitalized for tax
    
    
    59,327
    
    
    
    75,998Loan financing costs
    
    
    17,288
    
    
    
    27,890Investments
    
    
    61,643
    
    
    
    63,786Stock based compensation
    
    
    40,467
    
    
    
    31,904Property and equipment
    
    
    16,303
    
    
    
    13,258Other
    
    
    12,464
    
    
    
    45,811Total deferred tax assets
    
    
    2,224,779
    
    
    
    2,143,816Deferred tax liabilities:Carrying value of debt instruments
    
    
    (89,441
    )
    
    
    (89,525
    )FCC license
    
    
    (754,498
    )
    
    
    (752,174
    )Other intangible assets
    
    
    (251,360
    )
    
    
    (265,138
    )Net deferred tax liabilities
    
    
    (1,095,299
    )
    
    
    (1,106,837
    )Net deferred tax assets before valuation allowance
    
    
    1,129,480
    
    
    
    1,036,979Valuation allowance
    
    
    (1,980,113
    )
    
    
    (1,885,400
    )Net deferred tax liability
    
    $
    (850,633
    )
    
    $
    (848,421
    )
     (14) Commitments and Contingencies
  (in thousands)
    
    2010
    
    
    2011
    
    
    2012
    
    
    2013
    
    
    2014
    
    
    Thereafter
    
    
    TotalLong-term debt obligations
    
    $
    11,382
    
    
    $
    116,580
    
    
    $
    27
    
    
    $
    1,304,250
    
    
    $
    555,260
    
    
    $
    
    
    
    $
    1,987,499Cash interest payments
    
    
    200,219
    
    
    
    210,850
    
    
    
    205,239
    
    
    
    169,791
    
    
    
    38,756
    
    
    
    
    
    
    
    824,855Lease obligations
    
    
    18,634
    
    
    
    7,693
    
    
    
    4,434
    
    
    
    2,102
    
    
    
    1,524
    
    
    
    1,114
    
    
    
    35,501Satellite and transmission
    
    
    45,467
    
    
    
    626
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,635
    
    
    
    54,728Programming and content
    
    
    56,466
    
    
    
    110,016
    
    
    
    100,321
    
    
    
    20,678
    
    
    
    14,350
    
    
    
    
    
    
    
    301,831Satellite performance
incentive payments
    
    
    4,384
    
    
    
    4,695
    
    
    
    5,030
    
    
    
    5,392
    
    
    
    5,784
    
    
    
    37,048
    
    
    
    62,333Marketing and distribution
    
    
    10,198
    
    
    
    9,272
    
    
    
    9,033
    
    
    
    3,000
    
    
    
    4,500
    
    
    
    
    
    
    
    36,003Other
    
    
    3,743
    
    
    
    395
    
    
    
    53
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,191Total
    
    $
    350,493
    
    
    $
    460,127
    
    
    $
    324,137
    
    
    $
    1,505,213
    
    
    $
    620,174
    
    
    $
    46,797
    
    
    $
    3,306,941
  F-29




---



##### Table of Contents



XM SATELLITE RADIO HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
 Long-term debt obligations.
 Cash interest payments.
 Satellite and transmission.
  Programming and content.
 Marketing and distribution.
 Satellite incentive payments.
 Operating lease obligations.
 Other.
   Legal Proceedings
 FCC Merger Order.
 Advanced Recording Functionality Disputes/Atlantic Recording Corporation, BMG Music, Capital
Records, Inc., Elektra Entertainment Group Inc., Interscope Records, Motown Record Company, L.P.,
Sony BMG Music Entertainment, UMG Recordings, Inc., Virgin Records, Inc. and Warner Bros. Records
Inc. v. XM Satellite Radio Inc.
  F-30




---



##### Table of Contents



XM SATELLITE RADIO HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
   Other Matters
 (15) Quarterly Financial Data  Unaudited
  Successor EntityFor the Three Months EndedMarch 31
    
    
    June 30
    
    
    September 30
    
    
    December 312009:Total revenue
    
    $
    302,234
    
    
    $
    306,831
    
    
    $
    325,473
    
    
    $
    362,802Cost of services
    
    
    (129,187
    )
    
    
    (120,449
    )
    
    
    (122,477
    )
    
    
    (117,444
    )Income from operations
    
    
    23,348
    
    
    
    19,372
    
    
    
    66,647
    
    
    
    86,472Net (loss) income
    
    
    (110,283
    )
    
    
    (191,997
    )
    
    
    (42,851
    )
    
    
    98,301
 Predecessor Entity
    
    
    
    Successor EntityJuly 1, 2008
    
    
    
    August 1, 2008
    
    
    For the ThreeFor the Three Months Ended
    
    
    Through
    
    
    
    Through
    
    
    Months EndedMarch 31, 2008
    
    
    June 30, 2008
    
    
    July 31, 2008
    
    
    
    September 30, 2008
    
    
    December 31, 2008Total revenue
    
    $
    308,454
    
    
    $
    318,035
    
    
    $
    104,704
    
    
    
    $
    195,603
    
    
    $
    315,551Cost of services
    
    
    (183,386
    )
    
    
    (188,413
    )
    
    
    (61,488
    )
    
    
    
    (97,882
    )
    
    
    (142,789
    )Loss from operations
    
    
    (93,684
    )
    
    
    (82,718
    )
    
    
    (54,066
    )
    
    
    
    (5,044,576
    )(1)
    
    
    (1,580,246
    )(1)Net loss
    
    
    (129,269
    )
    
    
    (119,572
    )
    
    
    (73,618
    )
    
    
    
    (4,854,023
    )(1)
    
    
    (1,584,162
    )(1)
 
 (1)
    
    Includes goodwill impairment losses of $5,026,838 and $1,574,208 for the period August 1,
2008 through September 30, 2008, and for the three months ended December 31, 2008,
respectively. (16) Condensed Consolidating Financial Information
    Basis of Presentation
    F-31




---



##### Table of Contents



XM SATELLITE RADIO HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
 XM SATELLITE RADIO INC., SUBSIDIARIES AND AFFILIATES
CONDENSED CONSOLIDATING BALANCE SHEETS

AS OF DECEMBER 31, 2009
 ConsolidatedXM
    
    
    XM Non-
    
    
    
    
    
    
    Consolidated
    
    
    XM Satellite
    
    
    XM 1500
    
    
    XM
    
    
    
    
    
    
    XM SatelliteXM Satellite
    
    
    
    
    
    
    Equipment
    
    
    Guarantor
    
    
    
    
    
    
    XM Satellite
    
    
    Radio
    
    
    Eckington
    
    
    Investment
    
    
    
    
    
    
    Radio Holdings(in thousands)
    
    Radio Inc.
    
    
    XM Radio Inc.
    
    
    Leasing LLC
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Radio Inc.
    
    
    Holdings Inc.
    
    
    LLC
    
    
    LLC
    
    
    Eliminations
    
    
    Inc.Current assets:Cash and cash equivalents
    
    $
    205,376
    
    
    $
    
    
    
    $
    16
    
    
    $
    
    
    
    $
    
    
    
    $
    205,392
    
    
    $
    262
    
    
    $
    5,615
    
    
    $
    886
    
    
    $
    
    
    
    $
    212,155Accounts receivable, net
    
    
    60,042
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    60,042
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    60,042Due from subsidiaries/affiliates
    
    
    72,064
    
    
    
    784,768
    
    
    
    63,941
    
    
    
    774,293
    
    
    
    (105,444
    )
    
    
    1,589,622
    
    
    
    
    
    
    
    48,768
    
    
    
    6,216
    
    
    
    (1,644,606
    )
    
    
    Inventory, net
    
    
    4,016
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,016
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,016Prepaid expenses
    
    
    75,199
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    75,199
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    75,199Related party current assets
    
    
    106,612
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    106,612
    
    
    
    153
    
    
    
    
    
    
    
    
    
    
    
    (3,286
    )
    
    
    103,479Deferred tax asset
    
    
    64,641
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    64,641
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    64,641Other current assets
    
    
    4,385
    
    
    
    
    
    
    
    64
    
    
    
    
    
    
    
    
    
    
    
    4,449
    
    
    
    (60
    )
    
    
    196
    
    
    
    
    
    
    
    
    
    
    
    4,585Total current assets
    
    
    592,335
    
    
    
    784,768
    
    
    
    64,021
    
    
    
    774,293
    
    
    
    (105,444
    )
    
    
    2,109,973
    
    
    
    355
    
    
    
    54,579
    
    
    
    7,102
    
    
    
    (1,647,892
    )
    
    
    524,117Property and equipment, net
    
    
    463,882
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    463,882
    
    
    
    265,847
    
    
    
    57,157
    
    
    
    12,519
    
    
    
    
    
    
    
    799,405Investment in subsidiaries/affiliates
    
    
    2,864,002
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,864,002
    )
    
    
    
    
    
    
    (427,314
    )
    
    
    
    
    
    
    
    
    
    
    427,314
    
    
    
    FCC license
    
    
    
    
    
    
    2,000,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,000,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,000,000Restricted investments
    
    
    250
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    250
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    250Deferred financing fees, net
    
    
    5,307
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,307
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,307Intangible assets, net
    
    
    611,461
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    611,461
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    611,461Related party long-term assets
    
    
    396,556
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    396,556
    
    
    
    198
    
    
    
    
    
    
    
    
    
    
    
    (286,315
    )
    
    
    110,439Other long-term assets
    
    
    9,562
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,562
    
    
    
    13,916
    
    
    
    2,051
    
    
    
    
    
    
    
    
    
    
    
    25,529Total assets
    
    $
    4,943,355
    
    
    $
    2,784,768
    
    
    $
    64,021
    
    
    $
    774,293
    
    
    $
    (2,969,446
    )
    
    $
    5,596,991
    
    
    $
    (146,998
    )
    
    $
    113,787
    
    
    $
    19,621
    
    
    $
    (1,506,893
    )
    
    $
    4,076,508Current liabilities:Accounts payable and accrued expenses
    
    $
    230,106
    
    
    $
    
    
    
    $
    105
    
    
    $
    
    
    
    $
    (43,793
    )
    
    $
    186,418
    
    
    $
    11,875
    
    
    $
    295
    
    
    $
    72
    
    
    $
    (441
    )
    
    $
    198,219Accrued interest
    
    
    44,478
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    44,478
    
    
    
    2,461
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    46,939Due to subsidiaries/affiliates
    
    
    1,593,030
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (61,651
    )
    
    
    1,531,379
    
    
    
    110,413
    
    
    
    4,810
    
    
    
    714
    
    
    
    (1,647,316
    )
    
    
    Current portion of deferred revenue
    
    
    506,440
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    506,440
    
    
    
    2,776
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    509,216Current portion of deferred credit
on executory contracts
    
    
    252,831
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    252,831
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    252,831Current maturities of long-term debt
    
    
    11,382
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,382
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,382Current maturities of long-term
related party debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Related party current liabilities
    
    
    169,413
    
    
    
    
    
    
    
    143
    
    
    
    
    
    
    
    
    
    
    
    169,556
    
    
    
    11,766
    
    
    
    977
    
    
    
    516
    
    
    
    (897
    )
    
    
    181,918Total current liabilities
    
    
    2,807,680
    
    
    
    
    
    
    
    248
    
    
    
    
    
    
    
    (105,444
    )
    
    
    2,702,484
    
    
    
    139,291
    
    
    
    6,082
    
    
    
    1,302
    
    
    
    (1,648,654
    )
    
    
    1,200,505Deferred revenue
    
    
    135,363
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    135,363
    
    
    
    27,293
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    162,656Deferred credit on executory contracts
    
    
    784,078
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    784,078
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    784,078Long-term debt
    
    
    1,396,375
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,396,375
    
    
    
    105,974
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,502,349Long-term related party debt
    
    
    157,183
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    157,183
    
    
    
    282,340
    
    
    
    
    
    
    
    
    
    
    
    (282,340
    )
    
    
    157,183Deferred tax liability
    
    
    156,442
    
    
    
    758,832
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    915,274
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    915,274Related party long-term liability
    
    
    17,508
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17,508
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17,508Other long-term liabilities
    
    
    43,379
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    43,379
    
    
    
    
    
    
    
    (1,315
    )
    
    
    
    
    
    
    (3,213
    )
    
    
    38,851Total liabilities
    
    
    5,498,008
    
    
    
    758,832
    
    
    
    248
    
    
    
    
    
    
    
    (105,444
    )
    
    
    6,151,644
    
    
    
    554,898
    
    
    
    4,767
    
    
    
    1,302
    
    
    
    (1,934,207
    )
    
    
    4,778,404Commitments and contingenciesStockholders equity (deficit):Capital stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Accumulated other comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,581
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,581
    )Additional paid-in-capital
    
    
    (563,335
    )
    
    
    1,781,641
    
    
    
    57,853
    
    
    
    691,811
    
    
    
    (2,531,305
    )
    
    
    (563,335
    )
    
    
    5,989,700
    
    
    
    99,348
    
    
    
    17,615
    
    
    
    446,372
    
    
    
    5,989,700Retained earnings (deficit)
    
    
    8,682
    
    
    
    244,295
    
    
    
    5,920
    
    
    
    82,482
    
    
    
    (332,697
    )
    
    
    8,682
    
    
    
    (6,685,015
    )
    
    
    9,672
    
    
    
    704
    
    
    
    (19,058
    )
    
    
    (6,685,015
    )Total stockholders equity (deficit)
    
    
    (554,653
    )
    
    
    2,025,936
    
    
    
    63,773
    
    
    
    774,293
    
    
    
    (2,864,002
    )
    
    
    (554,653
    )
    
    
    (701,896
    )
    
    
    109,020
    
    
    
    18,319
    
    
    
    427,314
    
    
    
    (701,896
    )Total liabilities and stockholders
equity (deficit)
    
    $
    4,943,355
    
    
    $
    2,784,768
    
    
    $
    64,021
    
    
    $
    774,293
    
    
    $
    (2,969,446
    )
    
    $
    5,596,991
    
    
    $
    (146,998
    )
    
    $
    113,787
    
    
    $
    19,621
    
    
    $
    (1,506,893
    )
    
    $
    4,076,508
  F-32




---



##### Table of Contents



XM SATELLITE RADIO HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
 XM SATELLITE RADIO INC., SUBSIDIARIES AND AFFILIATES
CONDENSED CONSOLIDATING BALANCE SHEETS
AS OF DECEMBER 31, 2008
 ConsolidatedXM
    
    
    XM Non-
    
    
    
    
    
    
    Consolidated
    
    
    XM Satellite
    
    
    XM 1500
    
    
    XM
    
    
    
    
    
    
    XM SatelliteXM Satellite
    
    
    
    
    
    
    Equipment
    
    
    Guarantor
    
    
    
    
    
    
    XM Satellite
    
    
    Radio
    
    
    Eckington
    
    
    Investment
    
    
    
    
    
    
    Radio Holdings(in thousands)
    
    Radio Inc.
    
    
    XM Radio Inc.
    
    
    Leasing LLC
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Radio Inc.
    
    
    Holdings Inc.
    
    
    LLC
    
    
    LLC
    
    
    Eliminations
    
    
    Inc.Current assets:Cash and cash equivalents
    
    $
    199,938
    
    
    $
    
    
    
    $
    15
    
    
    $
    
    
    
    $
    
    
    
    $
    199,953
    
    
    $
    5,923
    
    
    $
    760
    
    
    $
    104
    
    
    $
    
    
    
    $
    206,740Accounts receivable, net
    
    
    52,727
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    52,727
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    52,727Due from subsidiaries/affiliates
    
    
    554,882
    
    
    
    605,231
    
    
    
    55,425
    
    
    
    742,499
    
    
    
    (1,957,994
    )
    
    
    43
    
    
    
    
    
    
    
    42,213
    
    
    
    5,337
    
    
    
    (47,593
    )
    
    
    Inventory, net
    
    
    4,489
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,489
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,489Prepaid expenses
    
    
    37,351
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    37,351
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    37,351Related party current assets
    
    
    108,482
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    108,482
    
    
    
    131
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    108,613Deferred tax asset
    
    
    38,051
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    38,051
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    38,051Other current assets
    
    
    12,039
    
    
    
    
    
    
    
    64
    
    
    
    
    
    
    
    
    
    
    
    12,103
    
    
    
    155
    
    
    
    258
    
    
    
    
    
    
    
    (155
    )
    
    
    12,361Total current assets
    
    
    1,007,959
    
    
    
    605,231
    
    
    
    55,504
    
    
    
    742,499
    
    
    
    (1,957,994
    )
    
    
    453,199
    
    
    
    6,209
    
    
    
    43,231
    
    
    
    5,441
    
    
    
    (47,748
    )
    
    
    460,332Property and equipment, net
    
    
    577,368
    
    
    
    
    
    
    
    3,912
    
    
    
    
    
    
    
    
    
    
    
    581,280
    
    
    
    221,011
    
    
    
    59,454
    
    
    
    12,843
    
    
    
    
    
    
    
    874,588Investment in subsidiaries/affiliates
    
    
    2,625,148
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,625,148
    )
    
    
    
    
    
    
    (351,193
    )
    
    
    
    
    
    
    
    
    
    
    351,193
    
    
    
    FCC license
    
    
    
    
    
    
    2,000,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,000,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,000,000Restricted investments
    
    
    120,250
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    120,250
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    120,250Deferred financing fees, net
    
    
    4,797
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,797
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,797Intangible assets, net
    
    
    688,671
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    688,671
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    688,671Related party long-term assets
    
    
    128,357
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    128,357
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    128,357Other long-term assets
    
    
    12,830
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,830
    
    
    
    19,400
    
    
    
    2,054
    
    
    
    
    
    
    
    
    
    
    
    34,284Total assets
    
    $
    5,165,380
    
    
    $
    2,605,231
    
    
    $
    59,416
    
    
    $
    742,499
    
    
    $
    (4,583,142
    )
    
    $
    3,989,384
    
    
    $
    (104,573
    )
    
    $
    104,739
    
    
    $
    18,284
    
    
    $
    303,445
    
    
    $
    4,311,279Current liabilities:Accounts payable and accrued expenses
    
    $
    237,139
    
    
    $
    
    
    
    $
    97
    
    
    $
    
    
    
    $
    
    
    
    $
    237,236
    
    
    $
    153
    
    
    $
    268
    
    
    $
    84
    
    
    $
    (442
    )
    
    $
    237,299Accrued interest
    
    
    47,118
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    47,118
    
    
    
    3,425
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    50,543Due to subsidiaries/affiliates
    
    
    1,929,803
    
    
    
    271
    
    
    
    3,121
    
    
    
    26,373
    
    
    
    (1,957,994
    )
    
    
    1,574
    
    
    
    
    
    
    
    3,669
    
    
    
    493
    
    
    
    (5,736
    )
    
    
    Current portion of deferred revenue
    
    
    416,931
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    416,931
    
    
    
    2,776
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    419,707Current portion of deferred credit
on executory contracts
    
    
    234,774
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    234,774
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    234,774Current portion of long-term debt
    
    
    135,257
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    135,257
    
    
    
    220,482
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    355,739Related party current liabilities
    
    
    83,930
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    83,930
    
    
    
    4,057
    
    
    
    
    
    
    
    
    
    
    
    (4,057
    )
    
    
    83,930Total current liabilities
    
    
    3,084,952
    
    
    
    271
    
    
    
    3,218
    
    
    
    26,373
    
    
    
    (1,957,994
    )
    
    
    1,156,820
    
    
    
    230,893
    
    
    
    3,937
    
    
    
    577
    
    
    
    (10,235
    )
    
    
    1,381,992Deferred revenue
    
    
    101,187
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    101,187
    
    
    
    30,068
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    131,255Deferred credit on executory contracts
    
    
    1,037,190
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,037,190
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,037,190Long-term debt
    
    
    1,248,643
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,248,643
    
    
    
    164,953
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,413,596Deferred tax liability
    
    
    134,301
    
    
    
    752,174
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    886,475
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    886,475Other long-term liabilities
    
    
    32,805
    
    
    
    (38
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    32,767
    
    
    
    45,067
    
    
    
    (1,315
    )
    
    
    
    
    
    
    (40,194
    )
    
    
    36,325Total liabilities
    
    
    5,639,078
    
    
    
    752,407
    
    
    
    3,218
    
    
    
    26,373
    
    
    
    (1,957,994
    )
    
    
    4,463,082
    
    
    
    470,981
    
    
    
    2,622
    
    
    
    577
    
    
    
    (50,429
    )
    
    
    4,886,833Commitments and contingenciesStockholders equity (deficit):Capital stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Accumulated other comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,871
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,871
    )Additional paid-in-capital
    
    
    (673,156
    )
    
    
    1,781,641
    
    
    
    55,262
    
    
    
    691,811
    
    
    
    (2,528,715
    )
    
    
    (673,157
    )
    
    
    5,870,502
    
    
    
    99,347
    
    
    
    17,557
    
    
    
    556,253
    
    
    
    5,870,502Retained earnings (deficit)
    
    
    199,458
    
    
    
    71,183
    
    
    
    936
    
    
    
    24,315
    
    
    
    (96,433
    )
    
    
    199,459
    
    
    
    (6,438,185
    )
    
    
    2,770
    
    
    
    150
    
    
    
    (202,379
    )
    
    
    (6,438,185
    )Total stockholders equity (deficit)
    
    
    (473,698
    )
    
    
    1,852,824
    
    
    
    56,198
    
    
    
    716,126
    
    
    
    (2,625,148
    )
    
    
    (473,698
    )
    
    
    (575,554
    )
    
    
    102,117
    
    
    
    17,707
    
    
    
    353,874
    
    
    
    (575,554
    )Total liabilities and stockholders
equity (deficit)
    
    $
    5,165,380
    
    
    $
    2,605,231
    
    
    $
    59,416
    
    
    $
    742,499
    
    
    $
    (4,583,142
    )
    
    $
    3,989,384
    
    
    $
    (104,573
    )
    
    $
    104,739
    
    
    $
    18,284
    
    
    $
    303,445
    
    
    $
    4,311,279
  F-33




---



##### Table of Contents



XM SATELLITE RADIO HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
 XM SATELLITE RADIO INC., SUBSIDIARIES AND AFFILIATES
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2009 (SUCCESSOR ENTITY)
 XM
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    ConsolidatedEquipment
    
    
    XM Non-
    
    
    
    
    
    
    Consolidated
    
    
    XM Satellite
    
    
    XM 1500
    
    
    XM
    
    
    
    
    
    
    XM SatelliteXM Satellite
    
    
    
    
    
    Leasing
    
    
    Guarantor
    
    
    
    
    
    
    XM Satellite
    
    
    Radio
    
    
    Eckington
    
    
    Investment
    
    
    
    
    
    
    Radio Holdings(in thousands)
    
    Radio Inc.
    
    
    XM Radio Inc.
    
    
    LLC
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Radio Inc.
    
    
    Holdings Inc.
    
    
    LLC
    
    
    LLC
    
    
    Eliminations
    
    
    Inc.Revenue
    
    $
    1,294,794
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    1,294,794
    
    
    $
    2,776
    
    
    $
    10,078
    
    
    $
    1,329
    
    
    $
    (11,636
    )
    
    $
    1,297,341Cost of services
    
    
    489,530
    
    
    
    
    
    
    
    27
    
    
    
    
    
    
    
    
    
    
    
    489,557
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    489,557Sales and marketing
    
    
    128,347
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    128,347
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    128,347Subscriber acquisition costs
    
    
    124,395
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    124,395
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    124,395General and administrative
    
    
    119,152
    
    
    
    
    
    
    
    34
    
    
    
    
    
    
    
    427
    
    
    
    119,613
    
    
    
    1,531
    
    
    
    1,252
    
    
    
    331
    
    
    
    (9,230
    )
    
    
    113,497Engineering, design and development
    
    
    21,671
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21,671
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21,671Depreciation and amortization
    
    
    178,626
    
    
    
    
    
    
    
    6,503
    
    
    
    
    
    
    
    
    
    
    
    185,129
    
    
    
    4,284
    
    
    
    1,924
    
    
    
    444
    
    
    
    
    
    
    
    191,781Restructuring, impairments and related costs
    
    
    8,058
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,058
    
    
    
    24,196
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    32,254Total operating expenses
    
    
    1,069,779
    
    
    
    
    
    
    
    6,564
    
    
    
    
    
    
    
    427
    
    
    
    1,076,770
    
    
    
    30,011
    
    
    
    3,176
    
    
    
    775
    
    
    
    (9,230
    )
    
    
    1,101,502Income (loss) from operations
    
    
    225,015
    
    
    
    
    
    
    
    (6,564
    )
    
    
    
    
    
    
    (427
    )
    
    
    218,024
    
    
    
    (27,235
    )
    
    
    6,902
    
    
    
    554
    
    
    
    (2,406
    )
    
    
    195,839Other income (expense):Interest and investment income
    
    
    12,688
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,688
    
    
    
    553
    
    
    
    
    
    
    
    
    
    
    
    (10,604
    )
    
    
    2,637Interest expense, net of amounts
capitalized
    
    
    (278,729
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (278,729
    )
    
    
    (25,488
    )
    
    
    
    
    
    
    
    
    
    
    14,372
    
    
    
    (289,845
    )Gain (loss) on change in value of
embedded derivative
    
    
    (33,534
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (33,534
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (33,534
    )Loss on extinguishment of debt and credit facilities, net
    
    
    (108,142
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (108,142
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,742
    )
    
    
    (115,884
    )Gain (loss) on investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,026
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,026
    )Other income (expense)
    
    
    (12,161
    )
    
    
    179,807
    
    
    
    11,548
    
    
    
    58,167
    
    
    
    (235,835
    )
    
    
    1,526
    
    
    
    (183,314
    )
    
    
    
    
    
    
    
    
    
    
    185,234
    
    
    
    3,446Net income (loss) before
income taxes
    
    
    (194,863
    )
    
    
    179,807
    
    
    
    4,984
    
    
    
    58,167
    
    
    
    (236,262
    )
    
    
    (188,167
    )
    
    
    (242,510
    )
    
    
    6,902
    
    
    
    554
    
    
    
    178,854
    
    
    
    (244,367
    )Benefit from (provision for)
income taxes
    
    
    4,086
    
    
    
    (6,696
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,610
    )
    
    
    (4,320
    )
    
    
    
    
    
    
    
    
    
    
    4,467
    
    
    
    (2,463
    )Net income (loss)
    
    
    (190,777
    )
    
    
    173,111
    
    
    
    4,984
    
    
    
    58,167
    
    
    
    (236,262
    )
    
    
    (190,777
    )
    
    
    (246,830
    )
    
    
    6,902
    
    
    
    554
    
    
    
    183,321
    
    
    
    (246,830
    )Add: net loss attributable to
noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net income (loss): XM Satellite
Radio Holdings Inc. and Subsidiaries
    
    $
    (190,777
    )
    
    $
    173,111
    
    
    $
    4,984
    
    
    $
    58,167
    
    
    $
    (236,262
    )
    
    $
    (190,777
    )
    
    $
    (246,830
    )
    
    $
    6,902
    
    
    $
    554
    
    
    $
    183,321
    
    
    $
    (246,830
    )
  F-34




---



##### Table of Contents



XM SATELLITE RADIO HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
 XM SATELLITE RADIO INC., SUBSIDIARIES AND AFFILIATES

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

FOR THE PERIOD AUGUST 1, 2008 THROUGH DECEMBER 31, 2008 (SUCCESSOR ENTITY)
 XM
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    ConsolidatedEquipment
    
    
    XM Non-
    
    
    
    
    
    
    Consolidated
    
    
    XM Satellite
    
    
    Satellite
    
    
    XM 1500
    
    
    XM
    
    
    
    
    
    
    XM SatelliteXM Satellite
    
    
    XM Radio
    
    
    Leasing
    
    
    Guarantor
    
    
    
    
    
    
    XM Satellite
    
    
    Radio Holdings
    
    
    Leasing (702-4),
    
    
    Eckington
    
    
    Investment
    
    
    
    
    
    
    Radio(in thousands)
    
    Radio Inc.
    
    
    Inc.
    
    
    LLC
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Radio Inc.
    
    
    Inc.
    
    
    LLT
    
    
    LLC
    
    
    LLC
    
    
    Eliminations
    
    
    Holdings Inc.Revenue
    
    $
    510,048
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    510,048
    
    
    $
    1,156
    
    
    $
    4,409
    
    
    $
    3,817
    
    
    $
    551
    
    
    $
    (8,827
    )
    
    $
    511,154Cost of services
    
    
    240,506
    
    
    
    
    
    
    
    (11
    )
    
    
    
    
    
    
    176
    
    
    
    240,671
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    240,671Sales and marketing
    
    
    76,104
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    76,104
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    76,104Subscriber acquisition costs
    
    
    64,865
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    64,865
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    64,865General and administrative
    
    
    49,817
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    49,817
    
    
    
    493
    
    
    
    
    
    
    
    469
    
    
    
    143
    
    
    
    (3,600
    )
    
    
    47,322Engineering, design and development
    
    
    11,658
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,658
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,658Impairment of goodwill
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,601,046
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,601,046Depreciation and amortization
    
    
    88,957
    
    
    
    
    
    
    
    3,891
    
    
    
    
    
    
    
    
    
    
    
    92,848
    
    
    
    1,158
    
    
    
    
    
    
    
    579
    
    
    
    257
    
    
    
    (532
    )
    
    
    94,310Total operating expenses
    
    
    531,907
    
    
    
    
    
    
    
    3,880
    
    
    
    
    
    
    
    176
    
    
    
    535,963
    
    
    
    6,602,697
    
    
    
    
    
    
    
    1,048
    
    
    
    400
    
    
    
    (4,132
    )
    
    
    7,135,976Income (loss) from operations
    
    
    (21,859
    )
    
    
    
    
    
    
    (3,880
    )
    
    
    
    
    
    
    (176
    )
    
    
    (25,915
    )
    
    
    (6,601,541
    )
    
    
    4,409
    
    
    
    2,769
    
    
    
    151
    
    
    
    (4,695
    )
    
    
    (6,624,822
    )Other income (expense):Interest and investment income
    
    
    3,785
    
    
    
    
    
    
    
    247
    
    
    
    24,561
    
    
    
    (24,807
    )
    
    
    3,786
    
    
    
    (490
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,296Interest expense, net of amounts
capitalized
    
    
    (122,318
    )
    
    
    
    
    
    
    
    
    
    
    (247
    )
    
    
    24,808
    
    
    
    (97,757
    )
    
    
    (13,068
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,670
    
    
    
    (107,155
    )Gain (loss) on change in value of
embedded derivative
    
    
    321,542
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    321,542
    
    
    
    805
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    322,347Loss on extinguishment of debt and credit facilities, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Gain (loss) on investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (25,762
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (25,762
    )Other income (expense)
    
    
    18,312
    
    
    
    72,147
    
    
    
    4,568
    
    
    
    
    
    
    
    (96,258
    )
    
    
    (1,231
    )
    
    
    202,834
    
    
    
    (2,821
    )
    
    
    
    
    
    
    
    
    
    
    (203,908
    )
    
    
    (5,126
    )Net income (loss) before
income taxes
    
    
    199,462
    
    
    
    72,147
    
    
    
    935
    
    
    
    24,314
    
    
    
    (96,433
    )
    
    
    200,425
    
    
    
    (6,437,222
    )
    
    
    1,588
    
    
    
    2,769
    
    
    
    151
    
    
    
    (204,933
    )
    
    
    (6,437,222
    )Benefit from (provision for)
income taxes
    
    
    
    
    
    
    (963
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (963
    )
    
    
    (963
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    963
    
    
    
    (963
    )Net income (loss)
    
    
    199,462
    
    
    
    71,184
    
    
    
    935
    
    
    
    24,314
    
    
    
    (96,433
    )
    
    
    199,462
    
    
    
    (6,438,185
    )
    
    
    1,588
    
    
    
    2,769
    
    
    
    151
    
    
    
    (203,970
    )
    
    
    (6,438,185
    )Add: net loss attributable to
noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net income (loss): XM Satellite
Radio Holdings Inc. and Subsidiaries
    
    $
    199,462
    
    
    $
    71,184
    
    
    $
    935
    
    
    $
    24,314
    
    
    $
    (96,433
    )
    
    $
    199,462
    
    
    $
    (6,438,185
    )
    
    $
    1,588
    
    
    $
    2,769
    
    
    $
    151
    
    
    $
    (203,970
    )
    
    $
    (6,438,185
    )
  F-35




---



##### Table of Contents



XM SATELLITE RADIO HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
 XM SATELLITE RADIO INC., SUBSIDIARIES AND AFFILIATES
UNAUDITED CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
FOR THE PERIOD JANUARY 1, 2008 THROUGH JULY 31, 2008 (PREDECESSOR ENTITY)
 XM
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    ConsolidatedEquipment
    
    
    XM Non-
    
    
    
    
    
    
    Consolidated
    
    
    XM Satellite
    
    
    Satellite
    
    
    XM 1500
    
    
    XM
    
    
    
    
    
    
    XM SatelliteXM Satellite
    
    
    XM Radio
    
    
    Leasing
    
    
    Guarantor
    
    
    
    
    
    
    XM Satellite
    
    
    Radio
    
    
    Leasing (702-4),
    
    
    Eckington
    
    
    Investment
    
    
    
    
    
    
    Radio(in thousands)
    
    Radio Inc.
    
    
    Inc.
    
    
    LLC
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Radio Inc.
    
    
    Holdings Inc.
    
    
    LLT
    
    
    LLC
    
    
    LLC
    
    
    Eliminations
    
    
    Holdings Inc.Revenue
    
    $
    725,314
    
    
    $
    104,112
    
    
    $
    6,394
    
    
    $
    
    
    
    $
    (110,506
    )
    
    $
    725,314
    
    
    $
    5,829
    
    
    $
    21,001
    
    
    $
    7,676
    
    
    $
    757
    
    
    $
    (29,383
    )
    
    $
    731,194Cost of services
    
    
    433,011
    
    
    
    
    
    
    
    21
    
    
    
    
    
    
    
    256
    
    
    
    433,288
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    433,288Sales and marketing
    
    
    126,054
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    126,054
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    126,054Subscriber acquisition costs
    
    
    174,083
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    174,083
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    174,083General and administrative
    
    
    120,349
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    120,349
    
    
    
    287
    
    
    
    
    
    
    
    611
    
    
    
    181
    
    
    
    (4,984
    )
    
    
    116,444Engineering, design and development
    
    
    23,045
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    23,045
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    23,045Depreciation and amortization
    
    
    85,302
    
    
    
    
    
    
    
    6,990
    
    
    
    
    
    
    
    
    
    
    
    92,292
    
    
    
    112
    
    
    
    
    
    
    
    811
    
    
    
    360
    
    
    
    (4,826
    )
    
    
    88,749Total operating expenses
    
    
    961,844
    
    
    
    
    
    
    
    7,011
    
    
    
    
    
    
    
    256
    
    
    
    969,111
    
    
    
    399
    
    
    
    
    
    
    
    1,422
    
    
    
    541
    
    
    
    (9,810
    )
    
    
    961,663Income (loss) from operations
    
    
    (236,530
    )
    
    
    104,112
    
    
    
    (617
    )
    
    
    
    
    
    
    (110,762
    )
    
    
    (243,797
    )
    
    
    5,430
    
    
    
    21,001
    
    
    
    6,254
    
    
    
    216
    
    
    
    (19,573
    )
    
    
    (230,469
    )Other income (expense):Interest and investment income
    
    
    2,618
    
    
    
    
    
    
    
    369
    
    
    
    34,193
    
    
    
    (34,562
    )
    
    
    2,618
    
    
    
    395
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,013Interest expense, net of amounts
capitalized
    
    
    (108,239
    )
    
    
    
    
    
    
    
    
    
    
    (369
    )
    
    
    34,560
    
    
    
    (74,048
    )
    
    
    (3,950
    )
    
    
    (13,558
    )
    
    
    
    
    
    
    
    
    
    
    17,619
    
    
    
    (73,937
    )Loss on extinguishment of debt and credit facilities, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Gain (loss) on investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (13,010
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (13,010
    )Other income (expense)
    
    
    25,362
    
    
    
    
    
    
    
    152
    
    
    
    
    
    
    
    (25,728
    )
    
    
    (214
    )
    
    
    (309,811
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    310,925
    
    
    
    900Net income (loss) before
income taxes
    
    
    (316,789
    )
    
    
    104,112
    
    
    
    (96
    )
    
    
    33,824
    
    
    
    (136,492
    )
    
    
    (315,441
    )
    
    
    (320,946
    )
    
    
    7,443
    
    
    
    6,254
    
    
    
    216
    
    
    
    308,971
    
    
    
    (313,503
    )Benefit from (provision for)
income taxes
    
    
    
    
    
    
    (1,348
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,348
    )
    
    
    (1,512
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,348
    
    
    
    (1,512
    )Net income (loss)
    
    
    (316,789
    )
    
    
    102,764
    
    
    
    (96
    )
    
    
    33,824
    
    
    
    (136,492
    )
    
    
    (316,789
    )
    
    
    (322,458
    )
    
    
    7,443
    
    
    
    6,254
    
    
    
    216
    
    
    
    310,319
    
    
    
    (315,015
    )Add: net loss attributable to
noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,443
    )
    
    
    (7,443
    )Net income (loss): XM Satellite
Radio Holdings Inc. and Subsidiaries
    
    $
    (316,789
    )
    
    $
    102,764
    
    
    $
    (96
    )
    
    $
    33,824
    
    
    $
    (136,492
    )
    
    $
    (316,789
    )
    
    $
    (322,458
    )
    
    $
    7,443
    
    
    $
    6,254
    
    
    $
    216
    
    
    $
    302,876
    
    
    $
    (322,458
    )
  F-36




---



##### Table of Contents



XM SATELLITE RADIO HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
 XM SATELLITE RADIO INC., SUBSIDIARIES AND AFFILIATES
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2007 (PREDECESSOR ENTITY)
 XM
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    ConsolidatedEquipment
    
    
    XM Non-
    
    
    
    
    
    
    Consolidated
    
    
    XM Satellite
    
    
    Satellite
    
    
    XM 1500
    
    
    XM
    
    
    
    
    
    
    XM SatelliteXM Satellite
    
    
    XM Radio
    
    
    Leasing
    
    
    Guarantor
    
    
    
    
    
    
    XM Satellite
    
    
    Radio
    
    
    Leasing (702-4),
    
    
    Eckington
    
    
    Investment
    
    
    
    
    
    
    Radio(in thousands)
    
    Radio Inc.
    
    
    Inc.
    
    
    LLC
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Radio Inc.
    
    
    Holdings Inc.
    
    
    LLT
    
    
    LLC
    
    
    LLC
    
    
    Eliminations
    
    
    Holdings Inc.Revenue
    
    $
    1,126,518
    
    
    $
    161,248
    
    
    $
    10,963
    
    
    $
    
    
    
    $
    (172,211
    )
    
    $
    1,126,518
    
    
    $
    9,993
    
    
    $
    31,825
    
    
    $
    9,262
    
    
    $
    1,276
    
    
    $
    (42,332
    )
    
    $
    1,136,542Cost of services
    
    
    709,570
    
    
    
    
    
    
    
    32
    
    
    
    
    
    
    
    457
    
    
    
    710,059
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    710,059Sales and marketing
    
    
    269,930
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    269,930
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    269,930Subscriber acquisition costs
    
    
    259,143
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    259,143
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    259,143General and administrative
    
    
    193,886
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    193,886
    
    
    
    518
    
    
    
    
    
    
    
    2,115
    
    
    
    444
    
    
    
    (8,389
    )
    
    
    188,574Engineering, design and development
    
    
    33,077
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    33,077
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    33,077Depreciation and amortization
    
    
    177,568
    
    
    
    
    
    
    
    12,090
    
    
    
    
    
    
    
    
    
    
    
    189,658
    
    
    
    2,707
    
    
    
    
    
    
    
    1,389
    
    
    
    617
    
    
    
    (7,175
    )
    
    
    187,196Total operating expenses
    
    
    1,643,174
    
    
    
    
    
    
    
    12,122
    
    
    
    
    
    
    
    457
    
    
    
    1,655,753
    
    
    
    3,225
    
    
    
    
    
    
    
    3,504
    
    
    
    1,061
    
    
    
    (15,564
    )
    
    
    1,647,979Income (loss) from operations
    
    
    (516,656
    )
    
    
    161,248
    
    
    
    (1,159
    )
    
    
    
    
    
    
    (172,668
    )
    
    
    (529,235
    )
    
    
    6,768
    
    
    
    31,825
    
    
    
    5,758
    
    
    
    215
    
    
    
    (26,768
    )
    
    
    (511,437
    )Other income (expense):Interest and investment income
    
    
    5,885
    
    
    
    
    
    
    
    695
    
    
    
    58,754
    
    
    
    (59,449
    )
    
    
    5,885
    
    
    
    8,199
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,084Interest expense, net of amounts
capitalized
    
    
    (178,354
    )
    
    
    
    
    
    
    
    
    
    
    (695
    )
    
    
    59,449
    
    
    
    (119,600
    )
    
    
    (3,306
    )
    
    
    (20,293
    )
    
    
    (491
    )
    
    
    (28
    )
    
    
    27,113
    
    
    
    (116,605
    )Loss on extinguishment of debt and credit facilities, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,923
    )
    
    
    (770
    )
    
    
    
    
    
    
    (3,693
    )Gain (loss) on investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (56,156
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (56,156
    )Other income (expense)
    
    
    43,944
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (43,864
    )
    
    
    80
    
    
    
    (638,825
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    640,764
    
    
    
    2,019Net income (loss) before
income taxes
    
    
    (645,181
    )
    
    
    161,248
    
    
    
    (464
    )
    
    
    58,059
    
    
    
    (216,532
    )
    
    
    (642,870
    )
    
    
    (683,320
    )
    
    
    11,532
    
    
    
    2,344
    
    
    
    (583
    )
    
    
    641,109
    
    
    
    (671,788
    )Benefit from (provision for)
income taxes
    
    
    
    
    
    
    (2,311
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,311
    )
    
    
    939
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,311
    
    
    
    939Net income (loss)
    
    
    (645,181
    )
    
    
    158,937
    
    
    
    (464
    )
    
    
    58,059
    
    
    
    (216,532
    )
    
    
    (645,181
    )
    
    
    (682,381
    )
    
    
    11,532
    
    
    
    2,344
    
    
    
    (583
    )
    
    
    643,420
    
    
    
    (670,849
    )Add: net loss attributable to
noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11,532
    )
    
    
    (11,532
    )Net income (loss): XM Satellite
Radio Holdings Inc. and Subsidiaries
    
    $
    (645,181
    )
    
    $
    158,937
    
    
    $
    (464
    )
    
    $
    58,059
    
    
    $
    (216,532
    )
    
    $
    (645,181
    )
    
    $
    (682,381
    )
    
    $
    11,532
    
    
    $
    2,344
    
    
    $
    (583
    )
    
    $
    631,888
    
    
    $
    (682,381
    )
  F-37




---



##### Table of Contents



XM SATELLITE RADIO HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
 XM SATELLITE RADIO INC., SUBSIDIARIES AND AFFILIATES
CONDENSED CONSOLIDATING STATEMENT OF STOCKHOLDERS DEFICIT AND COMPREHENSIVE LOSS
FOR THE YEARS ENDED DECEMBER 31, 2009, 2008 AND 2007
 XMEquipment
    
    
    XM Non-
    
    
    
    
    
    
    Consolidated XM
    
    
    
    
    
    
    Satellite
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Consolidated XMXM Satellite
    
    
    XM Radio
    
    
    Leasing
    
    
    Guarantor
    
    
    
    
    
    
    Satellite Radio
    
    
    XM Satellite Radio
    
    
    Leasing (702-4),
    
    
    XM 1500
    
    
    XM Investment
    
    
    
    
    
    
    Satellite Radio(in thousands)
    
    Radio Inc.
    
    
    Inc.
    
    
    LLC
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Inc.
    
    
    Holdings Inc.
    
    
    LLT
    
    
    Eckington LLC
    
    
    LLC
    
    
    Eliminations
    
    
    Holdings Inc.Balance at January 1, 2007
    
    $
    (447,174
    )
    
    $
    376,908
    
    
    $
    55,824
    
    
    $
    599,929
    
    
    $
    (1,032,661
    )
    
    $
    (447,174
    )
    
    $
    (397,880
    )
    
    $
    
    
    
    $
    27,502
    
    
    $
    8,893
    
    
    $
    410,779
    
    
    $
    (397,880
    )Net income (loss)
    
    
    (645,181
    )
    
    
    158,937
    
    
    
    (464
    )
    
    
    58,059
    
    
    
    (216,532
    )
    
    
    (645,181
    )
    
    
    (682,381
    )
    
    
    11,532
    
    
    
    2,344
    
    
    
    (583
    )
    
    
    643,420
    
    
    
    (670,849
    )Net loss attributable to noncontrolling interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11,532
    )
    
    
    (11,532
    )Other comprehensive income:Unrealized gain on available-for-sale
securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    125
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    125Realized gain on available-for-sale
securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    125
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    125Foreign currency translation
adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,126
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,126Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (677,005
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (677,005
    )Capital stock issuances
    
    
    22,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    22,000
    
    
    
    22,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (22,000
    )
    
    
    22,000Contributions (distributions)
to (from) paid-in capital
    
    
    226,871
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    226,871
    
    
    
    4,383
    
    
    
    49,993
    
    
    
    36,096
    
    
    
    138
    
    
    
    (313,098
    )
    
    
    4,383Share-based payment expense
    
    
    64,199
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    64,199
    
    
    
    64,199
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (64,199
    )
    
    
    64,199Balance at December 31, 2007
    
    $
    (779,285
    )
    
    $
    535,845
    
    
    $
    55,360
    
    
    $
    657,988
    
    
    $
    (1,249,193
    )
    
    $
    (779,285
    )
    
    $
    (984,303
    )
    
    $
    61,525
    
    
    $
    65,942
    
    
    $
    8,448
    
    
    $
    643,370
    
    
    $
    (984,303
    )Net income (loss)
    
    
    (316,789
    )
    
    
    102,764
    
    
    
    (96
    )
    
    
    33,824
    
    
    
    (136,492
    )
    
    
    (316,789
    )
    
    
    (322,458
    )
    
    
    7,443
    
    
    
    6,254
    
    
    
    216
    
    
    
    310,319
    
    
    
    (315,015
    )Net loss attributable to noncontrolling interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,443
    )
    
    
    (7,443
    )Other comprehensive loss:Unrealized loss on available-for-sale
securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (910
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (910
    )Foreign currency translation
adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (277
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (277
    )Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (323,645
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (323,645
    )Capital stock issuances
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    976
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    976Contributions (distributions)
to (from) paid-in capital
    
    
    (15,226
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    (15,224
    )
    
    
    (2,534
    )
    
    
    (4,718
    )
    
    
    (7,839
    )
    
    
    7,994
    
    
    
    19,787
    
    
    
    (2,534
    )Share-based payment expense
    
    
    34,485
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    34,485
    
    
    
    34,485
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (34,485
    )
    
    
    34,485Acquisition transactions
    
    
    315,273
    
    
    
    1,143,032
    
    
    
    (1
    )
    
    
    (1
    )
    
    
    (1,143,032
    )
    
    
    315,271
    
    
    
    7,111,384
    
    
    
    (89
    )
    
    
    34,991
    
    
    
    742
    
    
    
    (350,915
    )
    
    
    7,111,384Balance at July 31, 2008
    
    $
    (761,542
    )
    
    $
    1,781,641
    
    
    $
    55,263
    
    
    $
    691,811
    
    
    $
    (2,528,715
    )
    
    $
    (761,542
    )
    
    $
    5,836,363
    
    
    $
    64,161
    
    
    $
    99,348
    
    
    $
    17,400
    
    
    $
    580,633
    
    
    $
    5,836,363Successor Entity:Balance at August 1, 2008
    
    $
    (761,542
    )
    
    $
    1,781,641
    
    
    $
    55,263
    
    
    $
    691,811
    
    
    $
    (2,528,715
    )
    
    $
    (761,542
    )
    
    $
    5,836,363
    
    
    $
    64,161
    
    
    $
    99,348
    
    
    $
    17,400
    
    
    $
    580,633
    
    
    $
    5,836,363Net income (loss)
    
    
    199,462
    
    
    
    71,184
    
    
    
    935
    
    
    
    24,314
    
    
    
    (96,433
    )
    
    
    199,462
    
    
    
    (6,438,185
    )
    
    
    1,588
    
    
    
    2,769
    
    
    
    151
    
    
    
    (203,970
    )
    
    
    (6,438,185
    )Other comprehensive loss:Unrealized loss on available-for-sale
securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,040
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,040
    )Foreign currency translation
adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,831
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,831
    )Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,446,056
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,446,056
    )Restricted shares withheld
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (84
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (84
    )Contributions (distributions)
to (from) paid-in capital
    
    
    53,458
    
    
    
    (1
    )
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    53,458
    
    
    
    (701
    )
    
    
    (65,749
    )
    
    
    
    
    
    
    156
    
    
    
    12,135
    
    
    
    (701
    )Share-based payment expense
    
    
    34,924
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    34,924
    
    
    
    34,924
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (34,924
    )
    
    
    34,924Balance at December 31, 2008
    
    $
    (473,698
    )
    
    $
    1,852,824
    
    
    $
    56,198
    
    
    $
    716,126
    
    
    $
    (2,625,148
    )
    
    $
    (473,698
    )
    
    $
    (575,554
    )
    
    $
    
    
    
    $
    102,117
    
    
    $
    17,707
    
    
    $
    353,874
    
    
    $
    (575,554
    )Net income (loss)
    
    
    (190,777
    )
    
    
    173,111
    
    
    
    4,984
    
    
    
    58,167
    
    
    
    (236,262
    )
    
    
    (190,777
    )
    
    
    (246,830
    )
    
    
    
    
    
    
    6,902
    
    
    
    554
    
    
    
    183,321
    
    
    
    (246,830
    )Other comprehensive loss:Unrealized gain on available-for-sale
securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    473
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    473Foreign currency translation
adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    817
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    817Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (245,540
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (245,540
    )Contributions (distributions)
to (from) paid-in capital
    
    
    109,822
    
    
    
    1
    
    
    
    2,591
    
    
    
    
    
    
    
    (2,592
    )
    
    
    109,822
    
    
    
    119,198
    
    
    
    
    
    
    
    1
    
    
    
    58
    
    
    
    (109,881
    )
    
    
    119,198Balance at December 31, 2009
    
    $
    (554,653
    )
    
    $
    2,025,936
    
    
    $
    63,773
    
    
    $
    774,293
    
    
    $
    (2,864,002
    )
    
    $
    (554,653
    )
    
    $
    (701,896
    )
    
    $
    
    
    
    $
    109,020
    
    
    $
    18,319
    
    
    $
    427,314
    
    
    $
    (701,896
    )
  F-38




---



##### Table of Contents



XM SATELLITE RADIO HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
 XM SATELLITE RADIO INC., SUBSIDIARIES AND AFFILIATES
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2009 (SUCCESSOR ENTITY)
 XM
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    ConsolidatedEquipment
    
    
    XM Non-
    
    
    
    
    
    
    Consolidated XM
    
    
    XM Satellite
    
    
    XM 1500
    
    
    
    
    
    
    
    
    
    
    XM SatelliteXM Satellite
    
    
    XM Radio
    
    
    Leasing
    
    
    Guarantor
    
    
    
    
    
    
    Satellite Radio
    
    
    Radio Holdings
    
    
    Eckington
    
    
    XM Investment
    
    
    
    
    
    
    Radio(in thousands)
    
    Radio Inc.
    
    
    Inc.
    
    
    LLC
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Inc.
    
    
    Inc.
    
    
    LLC
    
    
    LLC
    
    
    Eliminations
    
    
    Holdings Inc.Net cash provided by
operating activities
    
    $
    221,569
    
    
    $
    
    
    
    $
    1
    
    
    $
    
    
    
    $
    
    
    
    $
    221,570
    
    
    $
    45,626
    
    
    $
    4,855
    
    
    $
    782
    
    
    $
    
    
    
    $
    272,833Cash flows from investing activities:Additions to property and
equipment
    
    
    (7,250
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,250
    )
    
    
    (46,215
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (53,465
    )Sale (purchase) of restricted and other
investments
    
    
    (48,450
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (48,450
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    48,450
    
    
    
    Net cash used in
investing activities
    
    
    (55,700
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (55,700
    )
    
    
    (46,215
    )
    
    
    
    
    
    
    
    
    
    
    48,450
    
    
    
    (53,465
    )Cash flows from financing activities:Long-term borrowings, net of costs
    
    
    388,399
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    388,399
    
    
    
    48,450
    
    
    
    
    
    
    
    
    
    
    
    (48,450
    )
    
    
    388,399Related party long-term borrowings,
net of costs
    
    
    93,818
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    93,818
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    93,818Repayment of long-term borrowings
    
    
    (530,645
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (530,645
    )
    
    
    (48,450
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (579,095
    )Repayment of long-term related
party borrowings
    
    
    (100,000
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (100,000
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (100,000
    )Payment of premiums on
redemption of debt
    
    
    (12,003
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,003
    )
    
    
    (5,072
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (17,075
    )Net cash used in
financing activities
    
    
    (160,431
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (160,431
    )
    
    
    (5,072
    )
    
    
    
    
    
    
    
    
    
    
    (48,450
    )
    
    
    (213,953
    )Net increase (decrease) in cash
and cash equivalents
    
    
    5,438
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    5,439
    
    
    
    (5,661
    )
    
    
    4,855
    
    
    
    782
    
    
    
    
    
    
    
    5,415Cash and cash equivalents at
beginning of period
    
    
    199,938
    
    
    
    
    
    
    
    15
    
    
    
    
    
    
    
    
    
    
    
    199,953
    
    
    
    5,923
    
    
    
    760
    
    
    
    104
    
    
    
    
    
    
    
    206,740Cash and cash equivalents at
end of period
    
    $
    205,376
    
    
    $
    
    
    
    $
    16
    
    
    $
    
    
    
    $
    
    
    
    $
    205,392
    
    
    $
    262
    
    
    $
    5,615
    
    
    $
    886
    
    
    $
    
    
    
    $
    212,155
  F-39




---



##### Table of Contents



XM SATELLITE RADIO HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
 XM SATELLITE RADIO INC., SUBSIDIARIES AND AFFILIATES
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
FOR THE PERIOD AUGUST 1, 2008 THROUGH DECEMBER 31, 2008 (SUCCESSOR ENTITY)
 XM
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    ConsolidatedEquipment
    
    
    XM Non-
    
    
    
    
    
    
    Consolidated XM
    
    
    XM Satellite
    
    
    Satellite
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    XM SatelliteXM Satellite
    
    
    XM Radio
    
    
    Leasing
    
    
    Guarantor
    
    
    
    
    
    
    Satellite Radio
    
    
    Radio Holdings
    
    
    Leasing (702-4),
    
    
    XM 1500
    
    
    XM Investment
    
    
    
    
    
    
    Radio(in thousands)
    
    Radio Inc.
    
    
    Inc.
    
    
    LLC
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Inc.
    
    
    Inc.
    
    
    LLT
    
    
    Eckington LLC
    
    
    LLC
    
    
    Eliminations
    
    
    Holdings Inc.Net cash (used in) provided by
operating activities
    
    $
    26,463
    
    
    $
    
    
    
    $
    (18
    )
    
    $
    
    
    
    $
    
    
    
    $
    26,445
    
    
    $
    (21,535
    )
    
    $
    1,479
    
    
    $
    746
    
    
    $
    104
    
    
    $
    
    
    
    $
    7,239Cash flows from investing activities:Additions to property and
equipment
    
    
    (13,116
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (13,116
    )
    
    
    (331
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (13,447
    )Purchases of restricted and other
investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Sale of restricted and other
investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25,400
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25,400Net cash (used in) provided by
investing activities
    
    
    (13,116
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (13,116
    )
    
    
    25,069
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,953Cash flows from financing activities:Proceeds from exercise of
warrants and stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Capital contributions from
Holdings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Long-term borrowings, net of costs
    
    
    531,743
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    531,743
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    531,743Payments to noncontrolling
interest
    
    
    (60,401
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (60,401
    )
    
    
    
    
    
    
    (1,479
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (61,880
    )Repayment of long-term borrowings
    
    
    (1,083,143
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,083,143
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,083,143
    )Payment of premiums on
redemption of debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (18,693
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (18,693
    )Other, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net cash used in
financing activities
    
    
    (611,801
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (611,801
    )
    
    
    (18,693
    )
    
    
    (1,479
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (631,973
    )Net increase (decrease) in cash
and cash equivalents
    
    
    (598,454
    )
    
    
    
    
    
    
    (18
    )
    
    
    
    
    
    
    
    
    
    
    (598,472
    )
    
    
    (15,159
    )
    
    
    
    
    
    
    746
    
    
    
    104
    
    
    
    
    
    
    
    (612,781
    )Cash and cash equivalents at
beginning of period
    
    
    798,392
    
    
    
    
    
    
    
    33
    
    
    
    
    
    
    
    
    
    
    
    798,425
    
    
    
    21,082
    
    
    
    
    
    
    
    14
    
    
    
    
    
    
    
    
    
    
    
    819,521Cash and cash equivalents at
end of period
    
    $
    199,938
    
    
    $
    
    
    
    $
    15
    
    
    $
    
    
    
    $
    
    
    
    $
    199,953
    
    
    $
    5,923
    
    
    $
    
    
    
    $
    760
    
    
    $
    104
    
    
    $
    
    
    
    $
    206,740
  F-40




---



##### Table of Contents



XM SATELLITE RADIO HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
 XM SATELLITE RADIO INC., SUBSIDIARIES AND AFFILIATES
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
FOR THE PERIOD JANUARY 1, 2008 THROUGH JULY 31, 2008 (PREDECESSOR ENTITY)
 XM
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    ConsolidatedEquipment
    
    
    XM Non-
    
    
    
    
    
    
    Consolidated XM
    
    
    XM Satellite
    
    
    Satellite
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    XM SatelliteXM Satellite
    
    
    XM Radio
    
    
    Leasing
    
    
    Guarantor
    
    
    
    
    
    
    Satellite Radio
    
    
    Radio Holdings
    
    
    Leasing (702-4),
    
    
    XM 1500
    
    
    XM Investment
    
    
    
    
    
    
    Radio(in thousands)
    
    Radio Inc.
    
    
    Inc.
    
    
    LLC
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Inc.
    
    
    Inc.
    
    
    LLT
    
    
    Eckington LLC
    
    
    LLC
    
    
    Eliminations
    
    
    Holdings Inc.Net cash (used in) provided by
operating activities
    
    $
    (278,970
    )
    
    $
    
    
    
    $
    22
    
    
    $
    
    
    
    $
    
    
    
    $
    (278,948
    )
    
    $
    20,961
    
    
    $
    6,897
    
    
    $
    4
    
    
    $
    
    
    
    $
    
    
    
    $
    (251,086
    )Cash flows from investing activities:Additions to property and
equipment
    
    
    (23,854
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (23,854
    )
    
    
    (6,989
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (30,843
    )Purchases of restricted and other
investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (34,825
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (34,825
    )Sale of restricted and other
investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net cash used in
investing activities
    
    
    (23,854
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (23,854
    )
    
    
    (41,814
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (65,668
    )Cash flows from financing activities:Proceeds from exercise of
warrants and stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    964
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    964Capital contributions from
Holdings
    
    
    13,125
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,125
    
    
    
    (13,125
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Long-term borrowings, net of costs
    
    
    1,023,190
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,023,190
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,023,190Payments to noncontrolling
interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,897
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,897
    )Repayment of long-term borrowings
    
    
    (35,210
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (35,210
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (35,210
    )Other, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,458
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,458
    )Net cash provided by (used in)
financing activities
    
    
    1,001,105
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,001,105
    
    
    
    (14,619
    )
    
    
    (6,897
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    979,589Net increase (decrease) in cash
and cash equivalents
    
    
    698,281
    
    
    
    
    
    
    
    22
    
    
    
    
    
    
    
    
    
    
    
    698,303
    
    
    
    (35,472
    )
    
    
    
    
    
    
    4
    
    
    
    
    
    
    
    
    
    
    
    662,835Cash and cash equivalents at
beginning of period
    
    
    100,111
    
    
    
    
    
    
    
    11
    
    
    
    
    
    
    
    
    
    
    
    100,122
    
    
    
    56,554
    
    
    
    
    
    
    
    10
    
    
    
    
    
    
    
    
    
    
    
    156,686Cash and cash equivalents at
end of period
    
    $
    798,392
    
    
    $
    
    
    
    $
    33
    
    
    $
    
    
    
    $
    
    
    
    $
    798,425
    
    
    $
    21,082
    
    
    $
    
    
    
    $
    14
    
    
    $
    
    
    
    $
    
    
    
    $
    819,521
  F-41




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##### Table of Contents



XM SATELLITE RADIO HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
 XM SATELLITE RADIO INC., SUBSIDIARIES AND AFFILIATES
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2007 (PREDECESSOR ENTITY)
 XM
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    ConsolidatedEquipment
    
    
    XMSR Non-
    
    
    
    
    
    
    Consolidated
    
    
    XM Satellite
    
    
    Satellite
    
    
    XM 1500
    
    
    XM
    
    
    
    
    
    
    XM SatelliteXM Satellite
    
    
    XM Radio
    
    
    Leasing
    
    
    Guarantor
    
    
    
    
    
    
    XM Satellite
    
    
    Radio
    
    
    Leasing (702-4),
    
    
    Eckington
    
    
    Investment
    
    
    
    
    
    
    Radio Holdings(in thousands)
    
    Radio Inc.
    
    
    Inc.
    
    
    LLC
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Radio Inc.
    
    
    Holdings Inc.
    
    
    LLT
    
    
    LLC
    
    
    LLC
    
    
    Eliminations
    
    
    Inc.Net cash (used in) provided by
operating activities
    
    $
    (162,982
    )
    
    $
    25
    
    
    $
    13,646
    
    
    $
    
    
    
    $
    
    
    
    $
    (149,311
    )
    
    $
    (55,626
    )
    
    $
    9,486
    
    
    $
    33,830
    
    
    $
    6,891
    
    
    $
    
    
    
    $
    (154,730
    )Cash flows from investing activities:Additions to property and
equipment
    
    
    (53,892
    )
    
    
    (25
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (53,917
    )
    
    
    (79,421
    )
    
    
    (288,500
    )
    
    
    
    
    
    
    
    
    
    
    288,500
    
    
    
    (133,338
    )Sales of property and equipment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    288,500
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (288,500
    )
    
    
    Purchases of restricted and other
investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Sale of restricted and other
investments
    
    
    110
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    110
    
    
    
    
    
    
    
    
    
    
    
    1,367
    
    
    
    346
    
    
    
    
    
    
    
    1,823Net cash (used in) provided by
investing activities
    
    
    (53,782
    )
    
    
    (25
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (53,807
    )
    
    
    209,079
    
    
    
    (288,500
    )
    
    
    1,367
    
    
    
    346
    
    
    
    
    
    
    
    (131,515
    )Cash flows from financing activities:Proceeds from exercise of
warrants and stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,244
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,244Capital contributions from
Holdings
    
    
    230,736
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    230,736
    
    
    
    (230,736
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Capital contributions from outside
investor to noncontrolling interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    57,700
    
    
    
    
    
    
    
    
    
    
    
    (57,700
    )
    
    
    Proceeds from insuance of debt by
noncontrolling
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    230,800
    
    
    
    
    
    
    
    
    
    
    
    (230,800
    )
    
    
    Long term borrowings, net of
related costs
    
    
    (4,262
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,262
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    288,500
    
    
    
    284,238Payments to noncontrolling
interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,486
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,486
    )Repayment of long term borrowings
    
    
    
    
    
    
    
    
    
    
    (13,667
    )
    
    
    
    
    
    
    
    
    
    
    (13,667
    )
    
    
    
    
    
    
    
    
    
    
    (32,410
    )
    
    
    (6,467
    )
    
    
    
    
    
    
    (52,544
    )Payment of premiums on
redemption of debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,923
    )
    
    
    (770
    )
    
    
    
    
    
    
    (3,693
    )Other, net
    
    
    (2,044
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,044
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,044
    )Net cash provided by (used in)
financing activities
    
    
    224,430
    
    
    
    
    
    
    
    (13,667
    )
    
    
    
    
    
    
    
    
    
    
    210,763
    
    
    
    (222,492
    )
    
    
    279,014
    
    
    
    (35,333
    )
    
    
    (7,237
    )
    
    
    
    
    
    
    224,715Net increase (decrease) in cash
and cash equivalents
    
    
    7,666
    
    
    
    
    
    
    
    (21
    )
    
    
    
    
    
    
    
    
    
    
    7,645
    
    
    
    (69,039
    )
    
    
    
    
    
    
    (136
    )
    
    
    
    
    
    
    
    
    
    
    (61,530
    )Cash and cash equivalents at
beginning of period
    
    
    92,445
    
    
    
    
    
    
    
    32
    
    
    
    
    
    
    
    
    
    
    
    92,477
    
    
    
    125,593
    
    
    
    
    
    
    
    146
    
    
    
    
    
    
    
    
    
    
    
    218,216Cash and cash equivalents at
end of period
    
    $
    100,111
    
    
    $
    
    
    
    $
    11
    
    
    $
    
    
    
    $
    
    
    
    $
    100,122
    
    
    $
    56,554
    
    
    $
    
    
    
    $
    10
    
    
    $
    
    
    
    $
    
    
    
    $
    156,686
  F-42




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##### Table of Contents



XM SATELLITE RADIO HOLDINGS INC. AND SUBSIDIARIES
 
 Schedule IISchedule of Valuation and Qualifying Accounts
 Balance at
    
    
    
    
    
    
    Write-offs/(in thousands)
    
    Beginning of
    
    
    Charged to
    
    
    Payments/
    
    
    
    
    
    
    Balance atDescription
    
    Period
    
    
    Expenses
    
    
    Other
    
    
    Adjustments
    
    
    End of PeriodPredecessor Entity:Year ended December 31, 2007Allowance for doubtful accounts
    
    $
    4,946
    
    
    
    12,740
    
    
    
    (11,816
    )
    
    $
    
    
    
    $
    5,870Deferred tax assetsvaluation allowance
    
    $
    1,274,456
    
    
    
    263,035
    
    
    
    
    
    
    $
    
    
    
    $
    1,537,491
 Balance at
    
    
    
    
    
    
    Write-offs/Beginning of
    
    
    Charged to
    
    
    Payments/
    
    
    
    
    
    
    Balance atDescription
    
    Period
    
    
    Expenses
    
    
    Other
    
    
    Adjustments
    
    
    End of PeriodPredecessor Entity:Period from January 1, 2008 to July 31, 2008Allowance for doubtful accounts
    
    $
    5,870
    
    
    
    8,523
    
    
    
    (7,267
    )
    
    $
    (7,126
    )(1)
    
    $
    Deferred tax assetsvaluation allowance
    
    $
    1,537,491
    
    
    
    113,497
    
    
    
    
    
    
    $
    (1,650,988
    )(1)
    
    $
    
 Balance at
    
    
    
    
    
    
    Write-offs/Beginning of
    
    
    Charged to
    
    
    Payments/
    
    
    
    
    
    
    Balance atDescription
    
    Period
    
    
    Expenses
    
    
    Other
    
    
    Adjustments
    
    
    End of PeriodSuccessor Entity:Period from August 1, 2008 to December 31, 2008Allowance for doubtful accounts
    
    $
    
    
    
    
    7,529
    
    
    
    (1,330
    )
    
    $
    
    
    
    $
    6,199Deferred tax assetsvaluation allowance
    
    $
    1,950,833
    (1)
    
    
    (65,433
    )
    
    
    
    
    
    $
    
    
    
    $
    1,885,400Year ended December 31, 2009Allowance for doubtful accounts
    
    $
    6,199
    
    
    
    15,649
    
    
    
    (16,491
    )
    
    $
    
    
    
    $
    5,357Deferred tax assetsvaluation allowance
    
    $
    1,885,400
    
    
    
    94,713
    
    
    
    
    
    
    $
    
    
    
    $
    1,980,113
 
 (1)
    
    Adjustments to reflect allocation of the purchase price in connection with the Merger.  F-43




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##### Table of Contents



EXHIBIT INDEX
 Exhibit
    
    
    
    Description2.1
    
    
    
    
    Agreement and Plan of Merger,
dated as of February 19, 2007,
among Sirius XM Radio Inc.,
Vernon Merger Corporation and XM
Satellite Radio Holdings Inc.
(incorporated by reference to
Exhibit 2.1 to XM Satellite Radio
Holdings Inc.s Current Report on
Form 8-K dated February 21,
2007).3.1
    
    
    
    
    Amended and Restated Certificate
of Incorporation of XM Satellite
Radio Holdings Inc. (incorporated
by reference to Exhibit 3.1 to XM
Satellite Radio Holdings Inc.s
Current Report on Form 8-K dated
December 9, 2009).3.2
    
    
    
    
    Bylaws of Vernon Merger
Corporation (incorporated by
reference to Exhibit 3.2 to XM
Satellite Radio Holdings Inc.s
Current Report on Form 8-K filed
July 30, 2008).****3.3
    
    
    
    
    Restated Certificate of
Incorporation of XM Satellite
Radio Inc. (incorporated by
reference to XM Satellite Radio
Holdings Inc.s Registration
Statement on Form S-4, File No.
333-391789).3.4
    
    
    
    
    Amended and Restated Bylaws of XM
Satellite Radio Inc.
(incorporated by reference to
Exhibit 3.10 to Sirius XM Radio
Inc.s Quarterly Report on Form
10-Q for the quarter ended
September 30, 2008).3.5
    
    
    
    
    Certificate of Ownership and
Merger, dated August 5, 2008
(incorporated by reference to
Exhibit 3.1 to Sirius XM Radio
Inc.s Current Report on Form 8-K
dated August 5, 2008).4.1
    
    
    
    
    Form of certificate for shares of
Sirius XM Radio Inc.s Common
Stock (incorporated by reference
to Exhibit 4.3 to Sirius XM Radio
Inc.s Registration Statement on
Form S-1 (File No. 33-74782)).4.2
    
    
    
    
    Warrant Agreement, dated March
15, 2000, between XM Satellite
Radio Holdings Inc., as Issuer,
and United States Trust Company
of New York, as Warrant Agent
(incorporated by reference to
Amendment No. 1 to Exhibit 4.5 to
XM Satellite Radio Holdings
Inc.s Registration Statement on
Form S-1, File No. 333-39176).4.3
    
    
    
    
    Warrant Registration Rights
Agreement, dated March 15, 2000,
among XM Satellite Radio Holdings
Inc., Bear, Stearns & Co., Inc.,
Donaldson, Lufkin and Jenrette
Securities Corporation, Salomon
Smith Barney Inc. and Lehman
Brothers Inc. (incorporated by
reference to Exhibit 4.6 to
Amendment No. 1 to XM Satellite
Radio Holdings Inc.s
Registration Statement on Form
S-1, File No. 333-39176).
  E-1




---



##### Table of Contents



Exhibit
    
    
    
    Description4.4
    
    
    
    
    Form of Warrant (incorporated by
reference to Exhibit 4.7 to
Amendment No. 1 to XM Satellite
Radio Holdings Inc.s
Registration Statement on Form
S-1, File No. 333-39176).4.5
    
    
    
    
    Amended and Restated Security
Agreement, dated as of January
28, 2003, between XM Satellite
Radio Inc. and The Bank of New
York (incorporated by reference
to Exhibit 4.3 to XM Satellite
Radio Holdings Inc.s Current
Report on Form 8-K filed on
January 29, 2003).4.6
    
    
    
    
    Indenture, dated as of May 1,
2006, among XM Satellite Radio
Holdings Inc., XM Satellite Radio
Inc. and The Bank of New York, as
trustee, relating to the 9.75%
Senior Notes due 2014
(incorporated by reference to
Exhibit 4.1 to XM Satellite Radio
Holdings Inc.s Current Report on
Form 8-K filed on May 5, 2006).4.7
    
    
    
    
    Form of 9.75% Senior Note due
2014 (incorporated by reference
to Exhibit 4.3 to XM Satellite
Radio Holdings Inc.s Current
Report on Form 8-K filed on May
5, 2006).4.8
    
    
    
    
    Purchase Agreement, dated as of
July 24, 2008, among XM Escrow
LLC, XM Satellite Radio Inc., XM
Satellite Radio Holdings Inc., XM
Equipment Leasing LLC, XM Radio
Inc., J.P. Morgan Securities
Inc., Morgan Stanley & Co.
Incorporated and UBS Securities
LLC, relating to the 13% Senior
Notes due 2013 (incorporated by
reference to Exhibit 4.65 to
Sirius XM Radio Inc.s Quarterly
Report on Form 10-Q for the
quarter ended September 30,
2008).4.9
    
    
    
    
    Purchase Agreement, dated as of
July 28, 2008, among XM Satellite
Radio Inc., XM Satellite Radio
Holdings Inc., XM Equipment
Leasing LLC, XM Radio Inc.,
Sirius XM Radio Inc., J.P. Morgan
Securities Inc., Morgan Stanley &
Co. Incorporated and UBS
Securities LLC, relating to the
7% Exchangeable Senior
Subordinated Notes due 2014
(incorporated by reference to
Exhibit 4.66 to Sirius XM Radio
Inc.s Quarterly Report on Form
10-Q for the quarter ended
September 30, 2008).4.10
    
    
    
    
    First Supplemental Warrant
Agreement, dated July 28, 2008,
among Sirius XM Radio Inc., XM
Satellite Radio Holdings Inc. and
The Bank of New York Mellon
relating to the Warrants, dated
March 15, 2000, with the United
States Trust Company of New York
(incorporated by reference to
Exhibit 4.67 to Sirius XM Radio
Inc.s Quarterly Report on Form
10-Q for the quarter ended
September 30, 2008).4.11
    
    
    
    
    First Supplemental Indenture,
dated July 28, 2008, among XM
Satellite Radio Inc., as issuer,
XM Satellite Radio Holdings Inc.,
XM Equipment Leasing LLC, XM
Radio Inc. and The Bank of New
York Mellon, relating to the
9.75% Senior Notes due 2014
(incorporated by reference to
Exhibit 4.72 to Sirius XM Radio
Inc.s Quarterly Report on Form
10-Q for the quarter ended
September 30, 2008).
  E-2




---



##### Table of Contents



Exhibit
    
    
    
    Description4.12
    
    
    
    
    Second Supplemental Indenture,
dated July 28, 2008, among XM
Satellite Radio Inc., as issuer,
XM Satellite Radio Holdings Inc.,
XM Equipment Leasing LLC, XM
Radio Inc. and The Bank of New
York Mellon, relating to the
9.75% Senior Notes due 2014
(incorporated by reference to
Exhibit 4.73 to Sirius XM Radio
Inc.s Quarterly Report on Form
10-Q for the quarter ended
September 30, 2008).4.13
    
    
    
    
    Indenture, dated as of July 31,
2008, among XM Escrow LLC and The
Bank of New York Mellon, relating
to the 13% Senior Notes due 2013
(incorporated by reference to
Exhibit 4.77 to Sirius XM Radio
Inc.s Quarterly Report on Form
10-Q for the quarter ended
September 30, 2008).4.14
    
    
    
    
    Supplemental Indenture, dated as
of July 31, 2008, among XM
Satellite Radio Holdings Inc., XM
Satellite Radio Inc., XM
Equipment Leasing LLC, XM Radio
Inc., and The Bank of New York
Mellon, relating to the 13%
Senior Notes due 2013
(incorporated by reference to
Exhibit 4.78 to Sirius XM Radio
Inc.s Quarterly Report on Form
10-Q for the quarter ended
September 30, 2008).4.15
    
    
    
    
    Supplemental Indenture, dated as
of July 31, 2008, among XM
Satellite Radio Holdings Inc., XM
Escrow LLC and The Bank of New
York Mellon, relating to the 13%
Senior Notes due 2013
(incorporated by reference to
Exhibit 4.79 to Sirius XM Radio
Inc.s Quarterly Report on Form
10-Q for the quarter ended
September 30, 2008).4.16
    
    
    
    
    Indenture, dated as of August 1,
2008 among XM Satellite Radio
Inc., XM Satellite Radio Holdings
Inc., XM Equipment LLC, XM Radio
Inc., Sirius XM Radio Inc. and
The Bank of New York Mellon, as
trustee, relating to the 7%
Exchangeable Senior Subordinated
Notes due 2014 (incorporated by
reference to Exhibit 4.80 to
Sirius XM Radio Inc.s Quarterly
Report on Form 10-Q for the
quarter ended September 30,
2008).4.17
    
    
    
    
    Registration Rights Agreement,
dated August 1, 2008, among XM
Satellite Radio Inc., XM
Satellite Radio Holdings Inc., XM
Equipment Leasing LLC, XM Radio
Inc., Sirius Satellite Radio
Inc., J.P. Morgan Securities
Inc., Morgan Stanley & Co.
Incorporated and UBS Securities
LLC, relating to the 7%
Exchangeable Senior Subordinated
Notes due 2014 (incorporated by
reference to Exhibit 4.81 to
Sirius XM Radio Inc.s Quarterly
Report on Form 10-Q for the
quarter ended September 30,
2008).4.18
    
    
    
    
    Note Purchase Agreement, dated as
of February 13, 2009, among
Sirius XM Radio Inc., XM
Satellite Radio Holdings Inc., XM
1500 Eckington LLC, XM Investment
LLC and the purchasers listed on
schedule I thereto, relating to
XM Satellite Radio Holdings
Inc.s 10% Senior PIK Secured
Notes due 2011 (incorporated by
reference to Exhibit 4.1 to
Sirius XM Radio Inc.s Current
Report on Form 8-K filed on
February 17, 2009).4.19
    
    
    
    
    Indenture, dated as of February
13, 2009, among Sirius XM Radio
Inc., XM Satellite Radio Holdings
Inc., XM 1500 Eckington LLC, XM
Investment LLC and U.S. Bank
National Association, as trustee
and collateral trustee, relating
to XM Satellite Radio Holdings
Inc.s 10% Senior PIK Secured
Notes due 2011 (incorporated by
reference to Exhibit 4.2 to
Sirius XM Radio Inc.s Current
Report on Form 8-K filed on
February 17, 2009).4.20
    
    
    
    
    Security Agreement, dated as of
February 13, 2009, among XM 1500
Eckington LLC, XM Investment LLC
and U.S. Bank National
Association, as collateral
trustee, relating to XM Satellite
Radio Holdings Inc.s 10% Senior
PIK Secured Notes due 2011
(incorporated by reference to
Exhibit 4.3 to Sirius XM Radio
Inc.s Current Report on Form 8-K
filed on February 17, 2009).
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##### Table of Contents



Exhibit
    
    
    
    Description4.21
    
    
    
    
    Deed of Trust, Assignment of
Leases and Rents, Security
Agreement and Fixture Filing,
dated as of February 13, 2009,
from XM 1500 Eckington LLC, as
grantor, to Stewart Title of
Maryland Inc., as trustee for the
benefit of U.S. Bank National
Association as collateral agent,
as beneficiary (incorporated by
reference to Exhibit 4.4 to
Sirius XM Radio Inc.s Current
Report on Form 8-K filed on
February 17, 2009).4.22
    
    
    
    
    Deed of Trust, Assignment of
Leases and Rents, Security
Agreement and Fixture Filing,
dated as of February 13, 2009,
from XM Investment LLC, as
grantor, to Stewart Title of
Maryland Inc., as trustee for the
benefit of U.S. Bank National
Association as collateral agent,
as beneficiary (incorporated by
reference to Exhibit 4.5 to
Sirius XM Radio Inc.s Current
Report on Form 8-K filed on
February 17, 2009).4.23
    
    
    
    
    Registration Rights Agreement,
dated as of February 13, 2009,
among Sirius XM Radio Inc., XM
Satellite Radio Holdings Inc., XM
1500 Eckington LLC, XM Investment
LLC and the purchasers signatory
thereto, relating to XM Satellite
Radio Holdings Inc.s 10% Senior
PIK Secured Notes due 2011
(incorporated by reference to
Exhibit 4.6 to Sirius XM Radio
Inc.s Current Report on Form 8-K
filed on February 17, 2009).4.24
    
    
    
    
    Third Supplemental Indenture,
dated as of March 6, 2009, among
XM Satellite Radio Inc., XM
Equipment Leasing LLC, XM Radio
Inc. and the Bank of New York
Mellon, as trustee, relating to
the 9.75% Senior Notes due 2014
(incorporated by reference to
Exhibit 4.56 to Sirius XM Radio
Inc.s Annual Report on Form 10-K
for the year ended December 31,
2008).4.25
    
    
    
    
    Indenture, dated June 30, 2009,
between XM Satellite Radio Inc.
and U.S. Bank National
Association relating to the
11.25% Senior Secured Notes due
2013 (incorporated by reference
to Exhibit 4.59 to Sirius XM
Radio Inc.s Quarterly Report on
Form 10-Q for the quarter ended
June 30, 2009).**10.1
    
    
    
    
    Operational Assistance Agreement,
dated as of June 7, 1999, between
XM Satellite Radio Inc. and Clear
Channel Communications, Inc.
(incorporated by reference to
Exhibit 10.10 to Amendment No. 1
to XM Satellite Radio Holdings
Inc.s Registration Statement on
Form S-1, File No. 333-83619).**10.2
    
    
    
    
    Technology Licensing Agreement
among XM Satellite Radio Inc., XM
Satellite Radio Holdings Inc.,
WorldSpace Management Corporation
and American Mobile Satellite
Corporation, dated as of January
1, 1998, amended by Amendment No.
1 to Technology Licensing
Agreement, dated June 7, 1999
(incorporated by reference to
Exhibit 10.3 to XM Satellite
Radio Holdings Inc.s Annual
Report on Form 10-K for the
period year December 31, 2007).***10.3
    
    
    
    
    Third Amended and Restated
Distribution and Credit
Agreement, dated as of February
6, 2008, among General Motors
Corporation, XM Satellite Radio
Holdings Inc. and XM Satellite
Radio Inc. (incorporated by
reference to Exhibit 10.63 to XM
Satellite Radio Holdings Inc.s
Annual Report on Form 10-K for
the year ended December 31,
2007).**10.4
    
    
    
    
    Third Amended and Restated
Satellite Purchase Contract for
In-Orbit Delivery, dated as of
May 15, 2001, between XM
Satellite Radio Inc. and Boeing
Satellite Systems International
Inc. (incorporated by reference
to Exhibit 10.36 to Amendment No.
1 to XM Satellite Radio Holdings
Inc.s Registration Statement on
Form S-3, File No. 333-89132).10.5
    
    
    
    
    Assignment and Novation
Agreement, dated as of December
5, 2001, among XM Satellite Radio
Holdings Inc., XM Satellite Radio
Inc. and Boeing Satellite Systems
International Inc. (incorporated
by reference to Exhibit 10.3 to
XM Satellite Radio Holdings
Inc.s Current Report on Form 8-K
filed on December 6, 2001).
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##### Table of Contents



Exhibit
    
    
    
    Description**10.6
    
    
    
    
    Amendment to the Satellite
Purchase Contract for In-Orbit
Delivery, dated as of December 5,
2001, between XM Satellite Radio
Inc. and Boeing Satellite Systems
International Inc. (incorporated
by reference to Exhibit 10.4 to
XM Satellite Radio Holdings
Inc.s Current Report on Form 8-K
filed on December 6, 2001).10.7
    
    
    
    
    Amended and Restated Assignment
and Use Agreement, dated as of
January 28, 2003, between XM
Satellite Radio Inc. and XM Radio
Inc. (incorporated by reference
to Exhibit 10.7 to XM Satellite
Radio Holdings Inc.s Current
Report on Form 8-K filed on
January 29, 2003).**10.8
    
    
    
    
    Amended and Restated Amendment to
the Satellite Purchase Contract
for In-Orbit Delivery, dated May
23, 2003, among XM Satellite
Radio Inc. and XM Satellite Radio
Holdings Inc. and Boeing
Satellite Systems International,
Inc. (incorporated by reference
to Exhibit 10.53 to XM Satellite
Radio Holdings Inc.s Quarterly
Report on Form 10-Q for the
quarter ended June 30, 2003).**10.9
    
    
    
    
    Amendment to the Satellite
Purchase Contract for In-Orbit
Delivery, dated July 31, 2003,
among XM Satellite Radio Inc. and
XM Satellite Radio Holdings Inc.
and Boeing Satellite Systems
International, Inc. (incorporated
by reference to Exhibit 10.54 to
XM Satellite Radio Holdings
Inc.s Quarterly Report on Form
10-Q for the quarter ended June
30, 2003).10.10
    
    
    
    
    December 2003 Amendment to the
Satellite Purchase Contract for
In-Orbit Delivery, dated December
19, 2003, among XM Satellite
Radio Inc., XM Satellite Radio
Holdings Inc. and Boeing
Satellite Systems International,
Inc. (incorporated by reference
to Exhibit 10.57 to XM Satellite
Radio Holdings Inc.s Annual
Report on Form 10-K for the year
ended December 31, 2003).10.11
    
    
    
    
    Waiver and Letter Agreement,
dated as of July 14, 2008, among
XM Satellite Radio Inc., XM
Satellite Radio Holdings Inc. and
certain beneficial owners of XM
Satellite Radio Inc.s 9.75%
Senior Notes due 2014
(incorporated by reference to
Exhibit 10.6 to XM Satellite
Radio Inc.s Current Report on
Form 8-K filed on July 17, 2008).10.12
    
    
    
    
    Collateral Agreement, dated as of
December 31, 2009, by and among
XM Satellite Radio Holdings Inc.,
XM Satellite Radio Inc., certain
subsidiaries thereof, and U.S.
Bank National Association, as
collateral agent relating to the
11.25% Senior Secured Notes due
2013 (incorporated by reference
to XM Satellite Radio Holdings
Inc.s Current Report on Form 8-K
filed on January 6, 2010).*10.13
    
    
    
    
    Form of Non-Qualified Stock Option Agreement (incorporated by reference
to Exhibit 10.2 to XM Satellite Radio Holdings Inc.s Current Report on
Form 8-K filed June 1, 2007).*10.14
    
    
    
    
    Form of Restricted Stock Agreement (incorporated by reference to Exhibit
10.3 to XM Satellite Radio Holdings Inc.s Current Report on Form 8-K
filed June 1, 2007).*10.15
    
    
    
    
    XM Satellite Radio Holdings Inc. 2007 Stock Incentive Plan (incorporated
by reference to Exhibit 10.5 to XM Satellite Radio Holdings Inc.s
Quarterly Report on Form 10-Q for the quarter ended June 30, 2007).21.1
    
    
    
    
    List of Subsidiaries (filed herewith).23.1
    
    
    
    
    Consent of KPMG LLP (filed herewith).31.1
    
    
    
    
    Certificate of Mel Karmazin, President of XM Satellite Radio Holdings
Inc., pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed
herewith).31.2
    
    
    
    
    Certificate of Mel Karmazin, President of XM Satellite Radio Inc.,
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed
herewith).31.3
    
    
    
    
    Certificate of David J. Frear, Treasurer of XM Satellite Radio Holdings
Inc., pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed
herewith).31.4
    
    
    
    
    Certificate of David J. Frear, Treasurer of XM Satellite Radio Inc.,
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed
herewith).
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##### Table of Contents



Exhibit
    
    
    
    Description32.1
    
    
    
    
    Certificate of Mel Karmazin, President and David J. Frear, Treasurer of
XM Satellite Radio Holdings Inc., pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed
herewith).32.2
    
    
    
    
    Certificate of Mel Karmazin, President and David J. Frear, Treasurer of
XM Satellite Radio Inc., pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed
herewith).
 
 *
    
    This document has been identified as a management contract or compensatory plan or
arrangement.**
    
    Pursuant to the Commissions Orders Granting Confidential Treatment under Rule 406 of the
Securities Act of 1933 or Rule 24(b)-2 under the Securities Exchange Act of 1934, certain
confidential portions of this Exhibit were omitted by means of redacting a portion of the
text.***
    
    Confidential treatment has been requested with respect to portions of this Exhibit that have
been omitted by redacting a portion of the text.****
    
    In accordance with the Agreement and Plan of Merger, dated as of February 17, 2007, entered
into by and among XM Satellite Radio Holdings Inc., Sirius Satellite Radio Inc. and Vernon
Merger Corporation (filed as Exhibit 2.1 herewith), the bylaws of Vernon Merger Corporation
became the bylaws of XM Satellite Radio Holdings Inc. upon the effectiveness of the Merger.  E-6