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| XM Satellite Radio Holdings Inc. |
| 1250 23rd Street, N.W., Suite 57, Washington, DC 20037-1100 * (202) 969-7100 |
| Business Description | We seek to become a premier nationwide provider of digital quality audio entertainment and information programming. We will transmit our service, which we will call "XM Radio," from our satellites to vehicle, home and portable radios. |
| Offering Information Company has | |||
| Trading As | XMSR (NASNTL) | Industry | Telecommunications (SIC 4899) |
| Type of Stock Offered | Class A Common Shares | Filing Date | 7/23/99 |
| Domestic Shares Offered | 10,000,000 | Offer Date | 10/4/99 |
| Foreign Shares Offered | 0 | Filing Range | $12.00 - $13.00 |
| Company Shares | 10,000,000 | Offer Price | $12.00 |
| Selling Shrhldrs Shares | 0 | Gross Spread | $0.810 |
| Gross Proceeds | $120,000,000 | Selling | $0.490 |
| Expenses | - - | Reallowance | $0.100 |
| Post-IPO Shares | 43,862,600 | Employees | 43 |
| Primary Underwriting Group | ||
| Underwriter Name | Participation | Underwriter Phone |
| Bear, Stearns & Co. Inc. | Lead Manager | (212) 272-4850 |
| Deutsch Banc Alex. Brown | Co-manager | (410) 727-1700 |
| Donaldson, Lufkin & Jenrette Securities Corp. | Co-manager | (212) 371-0641 |
| Merrill Lynch & Co. | Co-manager | (212) 449-4600 |
| Income Statement and Cash Flow Summary | |||||||
| Prior Audited Income |
Latest Unaudited Income | ||||||
| Full Year Audited Figures | 6 Months Ending | ||||||
| Figures in U.S. millions except per share data | 12/31/97 | 12/31/98 | 6/30/99 | ||||
| Revenues | - | - | - | 0.000 | 0.000 | - | 0.000 |
| Income from Oper. | - | - | - | -1.110 | -16.193 | - | -8.441 |
| Net Income | - | - | - | -1.659 | -16.167 | - | -8.365 |
| E.P.S | - | - | - | 13,941.000 | -129,336.000 | - | - |
| Revenue Growth (%) | - | - | - | - | - | ||
| Net Income Growth (%) | - | - | - | - | - | ||
| Oper. Profit Margin (%) | - | - | - | - | - | - | - |
| Net Profit Margin (%) | - | - | - | - | - | - | - |
| Cash Flow - Oper. | -1.30 | - | - | ||||
| Cash Flow - Inv. | -43.91 | - | - | ||||
| Cash Flow - Fin. | 45.52 | - | - | ||||
| Balance Sheet Summary and Financial Ratios | |||||
| Balance sheet as of: 6/30/99 | Financial Ratios | ||||
| Total Assets | 263.90 | Current Assets | 0.26 | Current Ratio | 0.00 |
| Total Liab. | 279.45 | Current Liab. | 198.35 | Debt Ratio | 105.89% |
| Total Equity | -15.55 | Working Cap. | -198.10 | Debt to Equity Ratio | - |
| Cash | 0.16 | Return on Assets | - | ||
| Use Of Proceeds |
The proceeds from the proposed offering will be used to fund a portion of our estimated expenses, including ongoing funding and scheduled milestone payments on our satellite contracts, continued development and build-out of the XM Radio system, and working capital and general corporate purposes. |
| Legal Counsel Registrar Auditor | |
| Issuer's Law Firm | Hogan & Hartson |
| Bank's Law Firm | Latham & Watkins |
| Auditor | KPMG LLC |
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| Industry Competition |
We expect to face competition for both listeners and advertising dollars. Our direct competitor in satellite radio service is likely to be CD Radio, the only other FCC licensee for satellite radio service in the United States. Since October 1997, CD Radio's common stock has traded on the Nasdaq National Market. CD Radio plans to deploy three satellites in a North American elliptical orbit and a network of terrestrial repeaters. CD Radio has announced that it has arrangements for the construction, implementation and distribution of its service and that it expects to begin receiving revenue from operations in early 2001, which is slightly ahead of our planned commencement of commercial operations in the second quarter of 2001. Our competition will also include traditional AM/FM radio. Unlike XM Radio, traditional AM/FM radio already has a well established market for its services and generally offers "free" broadcast reception paid for by commercial advertising rather than by a subscription fee. Also, many radio stations offer information programming of a local nature, such as traffic and weather reports, which XM Radio initially will be unable to offer as effectively as local radio, or at all. The AM/FM radio broadcasting industry is highly competitive. Radio stations compete for listeners and advertising revenues directly with other radio stations within their markets on the basis of a variety of factors, including Program content; On-air talent; Transmitter power; Source frequency; Audience characteristics; Local program acceptance; and the number and characteristics of other radio stations in the market. Currently, traditional AM/FM radio stations broadcast by means of analog signals, not digital transmission. We believe, however, that in the future traditional AM/FM radio broadcasters may be able to transmit digitally into the bandwidth occupied by current AM/FM stations. There are a growing number of "Internet radio" broadcasts which provide listeners with radio programming from around the country and the world. Internet radio can be heard through a personal computer equipped with a modem, sound card and speakers. One of the largest Internet radio providers, Broadcast.com Inc., currently provides a large number of stations on the Internet and has recently completed an initial public offering of stock, indicating growth in the industry. Although we believe that the current sound quality of Internet radio is below standard and may vary depending on factors such as network traffic, which can distort or interrupt the broadcast, we expect that improvements from higher bandwidths, faster modems and wider programming selection may make Internet radio a more significant competitor in the future. There are a number of Internet-based audio formats in existence or in development which could compete directly with XM Radio. For example, Internet users with the appropriate hardware and software can download sound files in the "MP3" format for free or for a nominal charge and play them from their personal computers or from specialized portable players. In addition, prominent members of the music and computer industry have supported a "Secure Digital Music Initiative" to become a standard for fee-based electronic distribution of copyrighted sound recordings. Although presently available formats have drawbacks (such as hardware requirements and download bandwidth constraints) which we believe would make XM Radio a more attractive option to consumers, Internet-based audio formats may become increasingly competitive as quality improves and costs are reduced. A number of companies provide specialized audio service through either direct broadcast satellite and cable audio systems. These services are targeted to fixed locations, mostly in-home. The radio service offered by direct broadcast satellite and cable audio is generally an add-on service to the higher priced video service. |