Sirius XM Radio (SIRI)

Free cash flow is calculated as net cash provided by operating activities, less additions to property and equipment, Merger related costs and restricted and other investment activity.

We refer to net loss before interest and investment income, interest expense net of amounts capitalized, income tax expense, loss from redemption of debt, loss on investments, other expense (income), restructuring and related cost, depreciation and amortization, and share related payment expense as adjusted income from operations.

Free cash flow and adjusted income from operations are not measures of financial performance under United States generally accepted accounting principles. We believe free cash flow and adjusted income from operations are useful measures of our operating performance. Pro forma free cash flow and pro forma adjusted operating income exclude the effects of stock-based compensation, purchase accounting adjustments, and includes the results of operations of XM prior to the July 28, 2008 Merger.

We measure the percentage of subscribers 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 generally receive between three and twelve month prepaid trial subscriptions and we receive a subscription fee from the automaker. 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.