Expects 2009 Total Net Synergies of $400 Million Expects 2009 Adjusted EBITDA of $300 Million
NEW YORK, June 30 /PRNewswire-FirstCall/ -- SIRIUS Satellite Radio
(Nasdaq: SIRI) today announced financial guidance for 2009 assuming the
completion of the merger of SIRIUS and XM Satellite Radio Holdings Inc. Based
upon the company's preliminary analysis, it announced that:
-- Total synergies, net of the costs to achieve such synergies, for the
combined company are expected to be approximately $400 million in 2009;
-- Adjusted EBITDA for the combined company is expected to be
approximately $300 million in 2009. Adjusted EBITDA is net income/(loss)
before interest and investment income, interest expense (net of amounts
capitalized), depreciation expense, and non-cash stock compensation expense;
and
-- The combined company is expected to achieve positive free cash flow,
before satellite capital expenditures, for the full year 2009.
To date, neither SIRIUS nor XM has reported positive adjusted EBITDA or
achieved free cash flow for a full year.
"The upside potential from this merger is significant. In addition, the
synergies, adjusted EBITDA and free cash flow are expected to continue to grow
in subsequent years, and we look forward to providing more detail of this
growth in coming months," said Mel Karmazin, SIRIUS Chief Executive Officer
and the previously announced CEO of the combined SIRIUS and XM.
The closing of the pending merger remains subject to the approval from the
Federal Communications Commission and satisfaction of other applicable
conditions, including the refinancing of certain XM debt. On March 24, 2008,
the U.S. Department of Justice informed SIRIUS and XM that it had ended its
investigation into the pending merger, that it had concluded that the merger
is not anti-competitive, and that it will allow the transaction to proceed.
SIRIUS and XM each obtained stockholder approval for the pending merger in
November 2007.
The company's financial guidance for total net synergies, adjusted EBITDA
and free cash flow assumes, among other things: that the merger will be
consummated in the third quarter of 2008; that XM will incur certain
incremental interest expense as a result of refinancing certain of its debt;
that the combined company will realize certain additional advertising and
subscriber revenue synergies as a result of the merger; and that the combined
company will achieve cost savings and efficiencies in nearly all aspects of
its operations. No assurance can be given that any of these objectives will
be met or that the amount of incremental interest at XM will not exceed that
anticipated by the company. Furthermore, the company's financial guidance
also assumes that the combined company will, following the consummation of the
merger, immediately take steps in nearly all operational areas to rationalize
its operations and realize the expected synergies in a timely manner, but no
assurance can be given that the necessary measures to realize expected
synergies will be implemented in a timely manner.
When the merger was structured, the parties determined that SIRIUS would
be the surviving public parent company and that XM would become a subsidiary
of SIRIUS. As a result, the preponderance of XM's existing debt will require
refinancing in connection with the merger. Because of the refinancing, the
combined company expects XM to incur incremental interest expense as a result
of refinancing certain of its debt. Principally as a result of this higher
interest expense at XM, among other factors, substantially more of the free
cash flow before satellite capital expenditures in 2009 is forecast to be
realized at SIRIUS, the parent company, than at XM. In addition, SIRIUS and
XM expect to refinance certain debt in 2009 that is scheduled to mature during
that year.
For more information on the SIRIUS-XM merger, please visit
www.SIRIUSmerger.com.
About SIRIUS
SIRIUS, "The Best Radio on Radio," delivers more than 130 channels of the
best programming in all of radio. SIRIUS is the original and only home of
100% commercial free music channels in satellite radio, offering 69 music
channels. SIRIUS also delivers 65 channels of sports, news, talk,
entertainment, traffic, weather and data. SIRIUS is the Official Satellite
Radio Partner of the NFL and NASCAR, and broadcasts live play-by-play games of
the NFL as well as live NASCAR races. All SIRIUS programming is available for
a monthly subscription fee of only $12.95.
SIRIUS Internet Radio (SIR) is an Internet-only version of the SIRIUS
radio service, without the use of a radio, for the monthly subscription fee of
$12.95. SIR delivers more than 80 channels of talk, entertainment, sports, and
100% commercial free music.
SIRIUS Backseat TV(TM) is the first ever live in-vehicle rear seat
entertainment featuring three channels of children's programming, including
Nickelodeon, Disney Channel and Cartoon Network, for the subscription fee of
$6.99 plus applicable audio subscription fee.
SIRIUS products for the car, truck, home, RV and boat are available at
shop.sirius.com and in more than 20,000 retail locations, including Best Buy,
Circuit City, Crutchfield, Target, Wal-Mart, Sam's Club and RadioShack.
As of December 31, 2007, SIRIUS radios were available as a factory and
dealer-installed option in 116 vehicle models and as a dealer only-installed
option in 37 vehicle models.
SIRIUS has agreements with Aston Martin, Audi, Automobili Lamborghini,
Bentley, BMW, Chrysler, Dodge, Ford, Jaguar, Jeep, Kia, Land Rover, Lincoln,
Maybach, Mazda, Mercedes-Benz, Mercury, MINI, Mitsubishi, Rolls-Royce, Volvo,
and Volkswagen to offer SIRIUS radios as factory or dealer-installed equipment
in their vehicles. SIRIUS has relationships with Toyota and Scion to offer
SIRIUS radios as dealer-installed equipment, and a relationship with Subaru to
offer SIRIUS radios as factory or dealer-installed equipment. SIRIUS radios
are also offered to renters of Hertz vehicles at airport locations nationwide.
Click on www.sirius.com to listen to SIRIUS live, or to purchase a SIRIUS
radio and subscription.
The guidance contained herein are based upon a number of assumptions and
estimates that, while considered reasonable by us when taken as a whole, are
inherently subject to significant business, economic and competitive
uncertainties and contingencies, many of which are beyond our control. In
addition, the guidance is based upon specific assumptions with respect to
future business conditions, some or all of which will change. The guidance,
like any forecast, is necessarily speculative in nature and it can be expected
that the assumptions upon which the guidance is based will not prove to be
valid or will vary from actual results. Actual results will vary from the
guidance and the variations may be material. Consequently, the guidance
should not be regarded as a representation by SIRIUS or any other person that
the synergies, adjusted EBITDA and free cash flow will actually be achieved.
You are cautioned not to place undue reliance on this information.
Any statements that express, or involve discussions as to, expectations,
beliefs, plans, objectives, assumptions, future events or performance with
respect to SIRIUS Satellite Radio Inc. are not historical facts and may be
forward-looking and, accordingly, such statements involve estimates,
assumptions and uncertainties which could cause actual results to differ
materially from those expressed in any forward-looking statements.
Accordingly, any such statements are qualified in their entirety by reference
to the factors discussed in our Annual Report on Form 10-K for the year ended
December 31, 2007 filed with the Securities and Exchange Commission. Among the
significant factors that could cause our actual results to differ materially
from those expressed are: our pending merger with XM Satellite Radio Holdings,
Inc. ("XM"), including related uncertainties and risks and the impact on our
business if the merger is not completed; any events which affect the useful
life of our satellites; our dependence upon third parties, including
manufacturers of SIRIUS radios, retailers, automakers and programming
providers; and our competitive position versus other audio entertainment
providers.
SOURCE SIRIUS Satellite Radio
