Sirius XM Radio (SIRI)

Satellite and transmission expenses increased $11.3 million to $39.2 million for the year ended December 31, 2006 from $27.9 million for the year ended December 31, 2005. The increase was primarily attributable to an impairment charge in the second quarter of 2006 associated with certain satellite long-lead time parts purchased in 1999 that will no longer be needed as a result of the company’s new satellite contract announced in 2006.

Programming and content expenses increased $131.6 million to $230.2 million for the year ended December 31, 2006 from $98.6 million for the year ended December 31, 2005. The increase was primarily attributable to license fees and talent costs associated with new programming, including the Howard Stern show which launched in January 2006, and higher broadcast and webstreaming royalties as a result of the company’s larger subscriber base.

Customer service and billing expenses increased $21.5 million to $68.1 million for the year ended December 31, 2006 from $46.6 million for the year ended December 31, 2005. The increase was primarily attributable to call center operating costs necessary to accommodate the increase in the company’s subscriber base and transaction fees due to the addition of new subscribers. Customer service and billing expenses per average subscriber per month declined 41% to $1.24 for the year ended December 31, 2006 from $2.10 for the year ended December 31, 2005.

Cost of equipment increased $23.4 million to $35.2 million for the year ended December 31, 2006 from $11.8 million for the year ended December 31, 2005. The increase was primarily attributable to higher sales volume and per unit costs as the company continued to introduce new products through the direct to consumer distribution channel.

Sales and marketing expenses increased $51.9 million to $222.5 million for the year ended December 31, 2006 from $170.6 million for the year ended December 31, 2005. This 30% increase in sales and marketing expenses compared with a 163% increase in total revenue from $242.2 million for the year ended December 31, 2005 to $637.2 million for the year ended December 31, 2006. The increase in sales and marketing expenses was primarily attributable to increased retail residuals; OEM revenue share as a result of a 138% increase in the company’s OEM subscriber base; cooperative marketing and advertising costs; and compensation related costs.

Subscriber acquisition costs increased $70.1 million to $419.7 million for the year ended December 31, 2006 from $349.6 million for the year ended December 31, 2005. The increase was primarily attributable to decreased aftermarket hardware subsidies as the company continued to reduce manufacturing and chip set costs, offset by increased OEM hardware subsidies due to higher production volume and costs related to FM transmitter compliance with FCC rules.

SAC per gross subscriber addition decreased 18% from $139 for the year ended December 31, 2005 to $114 for the year ended December 31, 2006 primarily due to lower average commission rates and decreased aftermarket and OEM average subsidy rates as the company continued to reduce manufacturing and chip set costs, offset by the per subscriber effect of costs related to FM transmitter compliance with FCC rules.

General and administrative expenses increased $27.7 million to $87.5 million for the year ended December 31, 2006 from $59.8 million for the year ended December 31, 2005. The increase

Subscriber acquisition costs increased $94.2 million to $298.7 million for the nine months ended September 30, 2006 from $204.5 million for the nine months ended September 30, 2005. The increase was primarily attributable to higher shipments of SIRIUS radios and chip sets to support a 101% increase in gross subscriber additions from 1,252,623 for the nine months ended September 30, 2005 to 2,523,587 for the nine months ended September 30, 2006, offset by reductions in hardware subsidy rates as the company continued to reduce manufacturing and chip set costs.

SAC per gross subscriber addition decreased 27% from $164 for the nine months ended September 30, 2005 to $119 for the nine months ended September 30, 2006 primarily due to the reduction in average subsidy rates as the company continued to reduce manufacturing and chip set costs.

General and administrative expenses increased $21.4 million to $64.3 million for the nine months ended September 30, 2006 from $42.9 million for the nine months ended September 30, 2005. The increase was primarily a result of legal fees, employment-related costs, rent and occupancy costs and bad debt expense to support the growth of the business.

Engineering, design and development expenses increased $12.7 million to $45.9 million for the nine months ended September 30, 2006 from $33.2 million for the nine months ended September 30, 2005 primarily as a result of costs associated with OEM tooling and manufacturing upgrades and receiver integration for factory installations of SIRIUS radios, development costs associated with the manufacturing of SIRIUS radios and additional personnel-related costs to support research and development efforts.

In September 2005, the company also recorded a ($6.2) million loss from the redemption of its 15% Senior Secured Discount Notes due 2007 and 14½% Senior Secured Notes due 2009.

For the nine months ended September 30, 2006 and 2005, the company recorded ($4.4) million and ($0.7) million, respectively, for its share of SIRIUS Canada, Inc.’s net loss.

SIRIUS reported a net loss of ($859.3) million, or ($0.61) per share, for the nine months ended September 30, 2006, including a ($0.01) per share impact from the impairment loss and ($0.28) per share impact from equity charges, compared with a net loss of ($551.6) million, or ($0.42) per share, for the nine months ended September 30, 2005, including a ($0.09) per share impact from equity charges. The adjusted net loss per share, or net loss per share excluding the impairment loss and equity charges, was ($0.32) for the nine months ended September 30, 2006 compared with an adjusted net loss per share of ($0.33) for the nine months ended September 30, 2005 (refer to the reconciliation table of net loss per share to adjusted net loss per share).

Customer service and billing expenses increased $12.3 million to $29.5 million for the six months ended June 30, 2006 from $17.2 million for the six months ended June 30, 2005. The increase was primarily attributable to call center operating costs necessary to accommodate the increase in the company’s subscriber base and transaction fees due to the addition of new subscribers. Customer service and billing expenses per average subscriber per month declined 38% to $1.21 for the six months ended June 30, 2006 from $1.96 for the six months ended June 30, 2005.

Sales and marketing expenses increased $26.5 million to $95.9 million for the six months ended June 30, 2006 from $69.4 million for the six months ended June 30, 2005. This 38% increase in sales and marketing expenses compared with a 127% increase in gross subscriber additions from 787,395 for the six months ended June 30, 2005 to 1,791,181 for the six months ended June 30, 2006. The increase was primarily attributable to increased residuals and OEM revenue share as a result of a 158% increase in the company’s subscriber base, as well as increased cooperative marketing spend with the company’s channel partners, advertising costs for the new marketing campaign and compensation related costs.

General and administrative expenses increased $11.8 million to $40.8 million for the six months ended June 30, 2006 from $29.0 million for the six months ended June 30, 2005. The increase was primarily a result of legal fees, employment-related costs and bad debt expense to support the growth of the business.

For the six months ended June 30, 2006, the company recorded ($4.4) million for its share of SIRIUS Canada, Inc.’s net loss.

SIRIUS reported a net loss of ($696.4) million, or ($0.50) per share, for the six months ended June 30, 2006, including a ($0.01) per share impact from the impairment loss and ($0.25) per share impact from equity charges, compared with a net loss of ($371.2) million, or ($0.28) per share, for the six months ended June 30, 2005, including a ($0.06) per share impact from equity charges. The adjusted net loss per share, or net loss per share excluding the impairment loss and equity charges, was ($0.24) for the six months ended June 30, 2006 compared with an adjusted net loss per share of ($0.22) for the six months ended June 30, 2005 (refer to the reconciliation table of net loss per share to adjusted net loss per share).

expansion to support the growth of the business. Engineering, design and development expenses increased $1.0 million to $12.7 million for the first quarter of 2006 from $11.7 million for the first quarter of 2005 primarily as a result of costs associated OEM tooling and manufacturing upgrades for SIRIUS factory installations.

For the first quarter of 2006, the company recorded ($4.4) million for its share of SIRIUS Canada, Inc.’s net loss.

SIRIUS reported a net loss of ($458.5) million, or ($0.33) per share, for the first quarter of 2006, including a ($0.20) per share impact from equity charges, compared to a net loss of ($193.6) million, or ($0.15) per share, in the year-ago quarter, including a ($0.03) per share impact from equity charges. The adjusted net loss per share, or net loss per share excluding equity charges, was ($0.13) in the first quarter 2006 as compared to an adjusted net loss per share of ($0.12) in the first quarter of 2005. (Refer to the reconciliation table of GAAP net loss per share to the adjusted net loss per share).

(Selected financial information follows).

This press release, including the selected financial information to follow, includes the following financial measures defined as non-GAAP financial measures by the Securities and Exchange Commission: average monthly churn; subscriber acquisition costs, or SAC, per gross subscriber addition; customer service and billing expenses per average subscriber; average monthly revenue per subscriber, or ARPU; adjusted loss from operations; adjusted net loss; adjusted net loss per share; and free cash flow. SIRIUS believes these non-GAAP financial measures provide meaningful supplemental information regarding operating performance and liquidity and are used for internal management purposes, when publicly providing the business outlook, and as a means to evaluate period-to-period comparisons. 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 or as a substitute for measures of financial performance prepared in accordance with GAAP.

SIRIUS defines average monthly churn as the number of deactivated subscribers divided by average quarterly subscribers.

SIRIUS defines SAC per gross subscriber addition as SAC and margins from the direct sale of SIRIUS radios and accessories divided by the number of gross subscriber additions for the period.

SIRIUS defines customer service and billing expenses per average subscriber as total customer service and billing expenses divided by the daily weighted average number of subscribers for the period.

SIRIUS defines ARPU as the total earned subscriber revenue and net advertising revenue divided by the daily weighted average number of subscribers for the period.

SIRIUS defines adjusted loss from operations as GAAP loss from operations before charges for depreciation and equity, reported as equity granted to third parties and employees. SIRIUS defines adjusted net loss as GAAP net loss before charges for equity granted to third parties and employees. SIRIUS defines adjusted net loss per share as adjusted net loss divided by the actual weighted average common shares outstanding (basic and diluted).

SIRIUS defines free cash flow as cash flow from operating activities, capital expenditures and restricted investments activity.