UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For The Quarterly Period Ended June 30, 2001
Commission file number 0-24710
SIRIUS SATELLITE RADIO INC.
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(Exact name of registrant as specified in its charter)
Delaware 52-1700207
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1221 Avenue of the Americas, 36th Floor
New York, New York 10020
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(Address of principal executive offices)
(Zip code)
212-584-5100
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(Registrant's telephone number, including area code)
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(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock, $.001 par value 54,061,944 shares
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(Class) (Outstanding as of August 8, 2001)
SIRIUS SATELLITE RADIO INC. AND SUBSIDIARY
(A Development Stage Enterprise)
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Part I - Financial Information
Consolidated Statements of Operations (Unaudited) for the three and six month 1
periods ended June 30, 2001 and 2000 and for the period May 17, 1990 (date
of inception) to June 30, 2001
Consolidated Balance Sheets as of June 30, 2001 (Unaudited) and 2
December 31, 2000
Consolidated Statements of Cash Flows (Unaudited) for the six month periods 3
ended June 30, 2001 and 2000 and for the period May 17, 1990 (date of
inception) to June 30, 2001
Notes to Consolidated Financial Statements (Unaudited) 4
Management's Discussion and Analysis of Financial Condition and Results 8
of Operations
Part II - Other Information 16
Signatures 17
SIRIUS SATELLITE RADIO INC. AND SUBSIDIARY
(A Development Stage Enterprise)
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
For the Three Months For the Six Months Cumulative for the
Ended June 30, Ended June 30, period May 17, 1990
------------------------------- ----------------------------- (date of inception)
2001 2000 2001 2000 to June 30, 2001
-------------- -------------- ------------- ------------- -------------------
Revenue $ - $ - $ - $ - $ -
Operating expenses:
Engineering design and development (14,206) (17,163) (31,765) (33,974) (141,824)
General and administrative (20,799) (9,693) (41,614) (17,928) (145,949)
Non-cash stock compensation charge (11,647) (2,012) (12,589) (3,742) (24,307)
Special charges - - - - (27,682)
-------- -------- --------- -------- ---------
Total operating expenses (46,652) (28,868) (85,968) (55,644) (339,762)
-------- -------- --------- -------- ---------
Other income (expense):
Interest and investment income 5,769 6,595 9,376 14,426 63,015
Interest expense (21,185) (12,519) (39,565) (18,385) (106,350)
-------- -------- --------- -------- ---------
(15,416) (5,924) (30,189) (3,959) (43,335)
-------- -------- --------- -------- ---------
Loss before income taxes (62,068) (34,792) (116,157) (59,603) (383,097)
Income taxes:
Federal - - - - (1,982)
State - - - - (313)
-------- -------- --------- -------- ---------
Net loss (62,068) (34,792) (116,157) (59,603) (385,392)
-------- -------- --------- -------- ---------
Preferred stock dividends (10,223) (9,486) (20,388) (20,324) (112,238)
Preferred stock deemed dividends (170) (698) (339) (7,916) (75,785)
Accretion of dividends in connection
with the issuance of warrants on
preferred stock - (6) - (900) (7,704)
-------- -------- --------- -------- ---------
Net loss applicable to common
stockholders $(72,461) $(44,982) $(136,884) $(88,743) $(581,119)
======== ======== ========= ======== =========
Net loss per share applicable to
common stockholders (basic and
diluted) $ (1.35) $ (1.11) $ (2.71) $ (2.45)
======== ======== ========= ========
Weighted average common shares
outstanding (basic and diluted) 53,861 40,643 50,498 36,163
======== ======== ========= ========
The accompanying notes are an integral part of these consolidated financial statements.
1
SIRIUS SATELLITE RADIO INC. AND SUBSIDIARY
(A Development Stage Enterprise)
CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
June 30, December 31,
2001 2000
---------------- ----------------
ASSETS (Unaudited)
Current assets:
Cash and cash equivalents $ 12,140 $ 14,397
Marketable securities, at market 404,608 129,153
Restricted investments, at amortized cost 28,034 41,510
Prepaid expenses and other 13,803 13,288
---------- ----------
Total current assets 458,585 198,348
---------- ----------
Property and equipment 1,052,062 1,016,570
Less: accumulated depreciation (7,400) (3,105)
---------- ----------
1,044,662 1,013,465
Other assets:
FCC license 83,368 83,368
Debt issuance costs, net 20,246 20,124
Deposits and other 3,122 8,277
---------- ----------
Total other assets 106,736 111,769
---------- ----------
Total assets $1,609,983 $1,323,582
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 37,708 $ 45,057
Satellite construction payable - 9,310
---------- ----------
Total current liabilities 37,708 54,367
Long-term notes payable and accrued interest 631,847 472,602
Deferred satellite payments and accrued interest 63,937 60,881
Deferred income taxes 2,237 2,237
---------- ----------
Total liabilities 735,729 590,087
---------- ----------
Commitments and contingencies:
10-1/2% Series C Convertible Preferred Stock, no par value: 2,025,000
shares authorized, no shares issued or outstanding at June 30, 2001
and December 31, 2000 - -
9.2% Series A Junior Cumulative Convertible Preferred Stock, $.001 par
value: 4,300,000 shares authorized, 1,595,707 shares issued and
outstanding at June 30, 2001 and December 31, 2000 (liquidation
preference of $159,571), at net carrying value including accrued dividends 169,604 162,380
9.2% Series B Junior Cumulative Convertible Preferred Stock, $.001 par
value: 2,100,000 shares authorized, 715,703 shares issued and
outstanding at June 30, 2001 and December 31, 2000 (liquidation
preference of $71,570), at net carrying value including accrued dividends 73,857 70,507
9.2% Series D Junior Cumulative Convertible Preferred Stock, $.001 par value:
10,700,000 shares authorized, 2,145,688 shares issued and outstanding
at June 30, 2001 and December 31, 2000 (liquidation preference of
$214,569), at net carrying value including accrued dividends 220,278 210,125
Stockholders' equity:
Preferred stock, $.001 par value: 50,000,000 shares authorized,
8,000,000 shares designated as 5% Delayed Convertible Preferred
Stock, none issued or outstanding - -
Common stock, $.001 par value: 200,000,000 shares authorized,
53,982,252 and 42,107,957 shares issued and outstanding at
June 30, 2001 and December 31, 2000, respectively 54 42
Additional paid-in capital 795,853 559,676
Deficit accumulated during the development stage (385,392) (269,235)
---------- ----------
Total stockholders' equity 410,515 290,483
---------- ----------
Total liabilities and stockholders' equity $1,609,983 $1,323,582
========== ==========
The accompanying notes are an integral part of these consolidated financial statements.
2
SIRIUS SATELLITE RADIO INC. AND SUBSIDIARY
(A Development Stage Enterprise)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Cumulative for
For the Six Months Ended the period
June 30, May 17, 1990
------------------------------------ (date of inception)
2001 2000 to June 30, 2001
---------------- ---------------- --------------------
Cash flows from development stage activities:
Net loss $(116,157) $ (59,603) $ (385,392)
Adjustments to reconcile net loss to net cash provided by
(used in) development stage activities:
Depreciation expense 4,295 979 7,811
Increase in gain on marketable securities (2,682) (968) (4,958)
Loss on disposal of assets - 249 364
Special charges - - 25,557
Accretion of note payable charged as interest expense 45,237 38,498 206,041
Non-cash stock compensation charge 12,589 3,742 24,307
Expense incurred in connection with conversion of debt - 12,655 14,431
Increase (decrease) in cash and cash equivalents
resulting from changes in assets and liabilities:
Prepaid expenses and other (515) (4,006) (13,803)
Due to related party - - 351
Other assets 9,043 (11,332) 4,052
Accounts payable and accrued expenses (27,524) (15,619) (40,978)
Deferred taxes - - 2,237
--------- --------- -----------
Net cash used in development stage activities (75,714) (35,405) (159,980)
--------- --------- -----------
Cash flows from investing activities:
Sales (purchases) of marketable securities and
restricted investments, net (259,596) 12,615 (428,585)
Purchase of FCC license - - (83,368)
Purchases of property and equipment (41,746) (214,975) (1,015,748)
Acquisition of Sky-Highway Radio Corp. - - (2,000)
--------- --------- -----------
Net cash used in investing activities (301,342) (202,360) (1,529,701)
--------- --------- -----------
Cash flows from financing activities:
Proceeds from issuance of notes payable 145,000 1,882 398,145
Proceeds from issuance of common stock, net 229,503 100,100 591,584
Proceeds from issuance of preferred stock, net - 192,450 505,418
Proceeds from exercise of stock options and warrants 296 4,896 15,326
Proceeds from issuance of promissory notes and units, net - - 306,535
Proceeds from issuance of promissory notes to
related parties - - 2,965
Repayment of promissory notes - - (2,635)
Repayment of notes payable - (115,957) (115,957)
Loan from officer - - 440
--------- --------- -----------
Net cash provided by financing activities 374,799 183,371 1,701,821
--------- --------- -----------
Net increase (decrease) in cash and cash equivalents (2,257) (54,394) 12,140
Cash and cash equivalents at the beginning of period 14,397 81,809 -
--------- --------- -----------
Cash and cash equivalents at the end of period $ 12,140 $ 27,415 $ 12,140
========= ========= ===========
The accompanying notes are an integral part of these consolidated financial statements.
3
SIRIUS SATELLITE RADIO INC. AND SUBSIDIARY
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollar amounts in thousands, unless otherwise stated)
(Unaudited)
1. Business Activites
Sirius Satellite Radio Inc., a Delaware corporation, is developing a
service for broadcasting digital quality programming via satellites to vehicles,
homes and portable radios throughout the continental United States. We will
focus exclusively on providing a consumer service; consumer electronics
manufacturers will manufacture the radios required to receive our broadcasts. In
April 1997, we were the winning bidder in an auction by the Federal
Communications Commission for one of two national satellite broadcast licenses
with a winning bid of approximately $83,300. We paid the bid amount during 1997
and were awarded an FCC license on October 10, 1997. Our principal activities to
date have included obtaining regulatory approval for our service, constructing
and launching our three satellite constellation, constructing our national
broadcast studio, acquiring content for our programming, constructing our
terrestrial repeater network, arranging for the development of radios, strategic
planning and market research, recruiting our management team and securing
financing for capital expenditures and working capital.
2. Significant Accounting Policies
Basis of Presentation
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles and with
the instructions to Form 10-Q and Article 10 of Regulation S-X for interim
financial reporting. Accordingly, our financial statements do not include all
of the information and footnotes required by generally accepted accounting
principles. In the opinion of management, all adjustments (consisting only of
normal, recurring adjustments) considered necessary for fair presentation have
been included. We have not yet recognized any revenues, accordingly, our
financial statements are presented as those of a development stage enterprise,
as prescribed by Statement of Financial Accounting Standards ("SFAS") No. 7,
"Accounting and Reporting by Development Stage Enterprises." All intercompany
transactions have been eliminated in consolidation. These financial statements
should be read in connection with our consolidated financial statements and the
notes thereto in our Annual Report on Form 10-K for the year ended December
31, 2000.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of expenses during the
reported period. The estimates involve judgments with respect to, among other
things, various future factors which are difficult to predict and are beyond our
control. Actual amounts could differ from these estimates.
4
SIRIUS SATELLITE RADIO INC. AND SUBSIDIARY
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollar amounts in thousands, unless otherwise stated)
(Unaudited)
Marketable Securities and Restricted Investments
Marketable securities are classified as trading securities and are
stated at market value. Marketable securities consist of obligations of U.S.
government agencies and commercial paper issued by major U.S. corporations with
high credit ratings. We recognized unrealized holding gains on marketable
securities of $2,682 and $968 for the six month periods ended June 30, 2001 and
2000, respectively, and $4,958 for the period May 17, 1990 (date of inception)
to June 30, 2001.
Restricted investments consist of fixed income securities and are
stated at amortized cost plus accrued interest income. Restricted investments
are classified as held-to-maturity securities and unrealized holding gains and
losses are not reflected in earnings. As of June 30, 2001 and December 31, 2000,
we had an unrealized holding gain of $290 and an unrealized holding loss of $16,
respectively, related to these securities. We are required to hold the
securities included in restricted investments to pay interest on our 14-1/2%
Senior Secured Notes due 2009 through May 15, 2002.
Property and Equipment
All costs incurred related to activities necessary to prepare our
broadcast system for use are capitalized. To date, such costs consist of
satellite construction and launch, broadcast studio equipment, terrestrial
repeater network construction and capitalized interest.
Net Loss Per Share
Basic net loss per share is based on the weighted average number of
outstanding shares of our common stock during each reporting period. Diluted net
loss per share adjusts the weighted average for the potential dilution that
could occur if common stock equivalents (convertible preferred stock,
convertible debt, warrants and stock options) were exercised or converted into
common stock. As of June 30, 2001 and 2000, approximately 19,026,000 and
21,347,000 common stock equivalents were outstanding, respectively, and were
excluded from the calculation of diluted net loss per share, as they were
anti-dilutive.
Recent Accounting Pronouncements
In June 2001, the Financial Accounting Standards Board issued SFAS
No. 141, "Business Combinations" (effective June 30, 2001) and SFAS No. 142,
"Goodwill and Other Intangible Assets" (effective January 1, 2002). SFAS No. 141
prohibits pooling-of-interests accounting for acquisitions. SFAS No. 142
specifies that goodwill and certain intangible assets will no longer be
amortized but instead will be subject to periodic impairment testing. We are in
the process of evaluating the financial statement impact of the adoption of
these statements.
Reclassifications
Certain amounts in the prior years' financial statements have been
reclassified to conform to the current presentation.
5
SIRIUS SATELLITE RADIO INC. AND SUBSIDIARY
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollar amounts in thousands, unless otherwise stated)
(Unaudited)
3. Deferred Satellite Payments
Under an amended and restated contract (the "Loral Satellite Contract")
with Space Systems/Loral, Inc. ("Loral"), Loral agreed to defer certain amounts
due under the Loral Satellite Contract. The amounts deferred, which approximate
fair value, bear interest at 10% per year and were originally due in quarterly
installments beginning in June 2002. However, the agreement governing these
deferred amounts provides that this date, and subsequent payment dates, will be
extended by the number of days that the achievement of certain milestones under
the Loral Satellite Contract is delayed beyond the dates set forth in the Loral
Satellite Contract. Our fourth, spare, satellite is expected to be delivered to
ground storage in October 2001 and was originally expected to be delivered to
ground storage in October 2000. As a result of Loral's delay in delivering this
satellite, we do not expect to make any required payments with respect to these
deferred amounts until June 2003, at the earliest. We do have the right to
prepay any deferred payments together with accrued interest, without penalty. As
collateral security for these deferred payments, we have granted Loral a
security interest in our terrestrial repeater network.
4. Long-term Notes Payable
Long-term Notes Payable consists of the following:
June 30, 2001 December 31, 2000
------------------- ------------------------
15% Senior Secured Discount Notes due 2007 $236,899 $218,405
14-1/2% Senior Secured Notes due 2009 174,847 173,361
8-3/4% Convertible Subordinated Notes due 2009 80,836 80,836
Term Loan Facility (current stated interest of 9.97%) 139,265 -
-------- --------
Long-term Notes Payable $631,847 $472,602
======== ========
5. Commitments and Contingencies
Satellite Contract
We entered into the Loral Satellite Contract to build and launch the
satellites necessary for our service. We are committed to make aggregate
payments of approximately $745,890 under the Loral Satellite Contract. As of
June 30, 2001, $683,390 of this obligation had been satisfied. Our future
payments due to Loral, including deferred satellite payments, are as follows:
$12,500 in 2001, $0 in 2002, $25,000 in 2003 and $25,000 in 2004. The amount and
timing of these payments depends upon the completion of construction of our
fourth, spare, satellite.
6
SIRIUS SATELLITE RADIO INC. AND SUBSIDIARY
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollar amounts in thousands, unless otherwise stated)
(Unaudited)
Radio Commitments
Matsushita Communication Industrial Corporation of USA ("Panasonic")
has constructed a dedicated facility in Peachtree City, Georgia, to manufacture
radios capable of receiving our broadcasts. During the first year of production
of our radios at this facility, we are obligated to purchase certain radios not
purchased by other customers. Based on discussions with potential purchasers of
these radios, including consumer electronics retailers and suppliers to the
automotive industry, we do not expect to incur any costs under this agreement;
however, if Panasonic were unable to sell any of the applicable radios, our
costs could approximate $70,000.
Programming Agreements
We have entered into agreements with providers of non-music
programming. We are obligated, in certain instances, to pay license fees, share
advertising revenue from this programming or purchase advertising on properties
owned or controlled by these programmers.
6. Engineering Design and Development
We have entered into agreements with Agere Systems, Inc. (the successor
to the micro-electronics group of Lucent Technologies, Inc.) to develop and
manufacture integrated circuits ("chip sets") which will be used in radios
capable of receiving our broadcasts. In addition, we have entered into
agreements with Alpine Electronics Inc., Audiovox Corporation, Clarion Co.,
Ltd., Delphi Delco Electronics Systems, Fujitsu Ten Limited, Harman
International Industries, Incorporated, Kenwood Corporation, Mitsubishi Electric
Automotive America, Inc., Panasonic, Pioneer Corporation, Recoton Corporation,
Sanyo Electronic Co. Ltd., Sony Electronics Inc., Visteon Automotive Systems and
other manufacturers to design, develop and produce radios capable of receiving
our broadcasts and have agreed to pay certain costs associated with these
radios. We record expenses under these agreements as work is performed. Total
expenses related to these agreements were $22,183 and $24,990 for the six month
periods ended June 30, 2001 and 2000, respectively, and $96,864 for the period
May 17, 1990 (date of inception) to June 30, 2001.
7. Stock Option Plans
In April 2001, the Compensation Committee of our Board of Directors
amended the exercise price of approximately 3,982,000 employee stock options. In
accordance with Financial Accounting Standards Board Interpretation No. 44,
"Accounting for Certain Transactions Involving Stock Compensation," repriced
stock options are subject to variable accounting, which requires a
compensation charge or benefit to be recorded each period based on the market
value of our common stock until the repriced stock options are exercised,
forfeited or expire. We recognized a non-cash compensation charge of $10,083
for the quarter ended June 30, 2001 in connection with the repriced stock
options. We will record non-cash stock compensation charges or benefits based
on the market value of our common stock at the end of future reporting periods.
7
SIRIUS SATELLITE RADIO INC. AND SUBSIDIARY
(A Development Stage Enterprise)
Management's Discussion and Analysis of
Financial Condition and Results of Operations
(Dollar amounts in thousands, unless otherwise stated)
Special Note Regarding Forward-Looking Statements
The following cautionary statements identify important factors that
could cause our actual results to differ materially from those projected in
forward-looking statements made in this Quarterly Report on Form 10-Q and in
other reports and documents published by us from time to time. Any statements
about our beliefs, plans, objectives, expectations, assumptions, future events
or performance are not historical facts and may be forward-looking. These
statements are often, but not always, made through the use of words or phrases
such as "will likely result," "are expected to," "will continue," "is
anticipated," "estimated," "intends," "plans," "projection" and "outlook." Any
forward-looking statements are qualified in their entirety by reference to the
factors discussed throughout our Annual Report on Form 10-K for the year ended
December 31, 2000 (the "Form 10-K") and in other reports and documents published
by us from time to time, particularly the risk factors described under
"Business-Risk Factors" in Part I of the Form 10-K. Among the significant
factors that could cause our actual results to differ materially from those
expressed in the forward-looking statements are:
o the unavailability of radios capable of receiving our broadcasts
and our dependence upon third parties to manufacture and
distribute them;
o the potential risk of delay in implementing our business plan;
o the unproven market for our service; and
o our need for additional financing.
Because the risk factors referred to above could cause actual results
or outcomes to differ materially from those expressed in any forward-looking
statements made by us or on our behalf, you should not place undue reliance on
any such forward-looking statements. In addition, any forward-looking statements
speak only as of the date on which such statement is made, and we undertake no
obligation to update any forward-looking statement or statements to reflect
events or circumstances after the date on which such statement is made or to
reflect the occurrence of unanticipated events or otherwise. New factors emerge
from time to time, and it is not possible for us to predict which will arise or
to assess with any precision the impact of each factor on our business or the
extent to which any factor, or combination of factors, may cause results to
differ materially from those contained in any forward-looking statements.
8
Overview
Sirius Satellite Radio Inc. was organized in May 1990 and is in its
development stage. Our principal activities to date have included:
o obtaining regulatory approval for our service;
o constructing and launching our three satellite constellation;
o constructing our national broadcast studio;
o acquiring content for our programming;
o constructing our terrestrial repeater network;
o arranging for the development of radios capable of receiving our
broadcasts;
o strategic planning and market research;
o recruiting our management team; and
o securing financing for capital expenditures and working capital.
We will require additional funds for working capital, interest on
borrowings, financing costs and operating expenses until some time after we
commence commercial operations. We cannot assure you that we will ever commence
commercial operations, attain any particular level of revenues or achieve
profitability.
We expect to broadcast 50 channels of commercial-free music and up to
50 channels of news, sports and entertainment to consumers throughout the
continental United States and expect our primary source of revenues to be
subscription fees. Our subscription fee will be $12.95 per month, with a
one-time activation fee per subscriber. We also expect our subscription to be
included in the sale or lease of certain new vehicles. In addition, we expect to
derive revenues from directly selling or bartering limited advertising on our
non-music channels.
The operating expenses associated with our service will consist
primarily of marketing and sales costs, costs to acquire programming, expenses
of operating and maintaining our broadcasting system and general and
administrative costs. Costs to acquire programming include payments to maintain
an extensive music library, royalty payments for broadcasting music and payments
to providers of content for our non-music channels. As of August 8, 2001, we had
204 employees. On December 31, 2001, we expect to have approximately 300
employees.
We received title to our satellites on July 31, 2000, September 29,
2000 and December 20, 2000, following the completion of in-orbit testing of each
satellite. We expect our fourth, spare, satellite to be delivered to ground
storage in October 2001.
9
Results of Operations
Three Months Ended June 30, 2001 Compared with Three Months Ended June 30, 2000
We had net losses of $62,068 and $34,792 for the three months ended
June 30, 2001 and 2000, respectively. Our total operating expenses were $46,652
and $28,868 for the three months ended June 30, 2001 and 2000, respectively.
Engineering design and development costs were $14,206 and $17,163 for
the three months ended June 30, 2001 and 2000, respectively. These engineering
costs represented primarily payments to Agere Systems, Inc. (53% in the 2001
period and 41% in the 2000 period) and other radio development and manufacturing
partners (11% in the 2001 period and 24% in the 2000 period). The decrease in
costs in the 2001 period was due to lower payments in connection with our chip
set development effort and the completion of most activity relating to the
development of radios capable of receiving our broadcasts.
General and administrative expenses increased for the three months
ended June 30, 2001 to $20,799 from $9,693 for the three months ended June 30,
2000. General and administrative expenses increased principally due to the
growth of our workforce, operation of our terrestrial repeater network,
depreciation of our broadcast studio equipment and the cost of in-orbit
insurance for our three satellites during the entire 2001 period. The major
components of general and administrative expenses in the 2001 period were
salaries and employment related costs (24%), rent and occupancy costs (16%) and
marketing costs (11%), while in the 2000 period the major components were
salaries and employment related costs (38%), rent and occupancy costs (14%) and
marketing costs (10%). The remaining portion of general and administrative
expenses (49% in the 2001 period and 38% in the 2000 period) consisted of other
costs such as legal and regulatory, insurance, consulting, travel, depreciation
and supplies, with only insurance costs (14%) and depreciation (11%) exceeding
10% of the total in the 2001 period and no such amounts exceeding 10% of the
total in the 2000 period.
Non-cash stock compensation charge increased for the three months ended
June 30, 2001 to $11,647 from $2,012 for the three months ended June 30, 2000.
The increase in charges in the 2001 period resulted primarily from the charge
associated with the repricing of certain employee stock options in April 2001.
We expect to record future non-cash stock compensation charges or benefits based
on the market value of our common stock at the end of each reporting period.
The decrease in interest and investment income to $5,769 for the three
months ended June 30, 2001, from $6,595 for the three months ended June 30,
2000, was the result of lower rates of return on our investments in U.S.
government securities and commercial paper issued by major U.S. corporations
during the 2001 period.
Interest expense was $21,185 for the three months ended June 30, 2001
and $12,519 for the three months ended June 30, 2000, net of capitalized
interest of $4,711 and $20,181, respectively. Gross interest expense for the
2001 period decreased by $6,804 and capitalized interest decreased by $15,470,
compared to the 2000 period. The decrease in gross interest from the prior
period was due to the expense incurred during the 2000 period related to the
induced conversion of our 8-3/4% Convertible Subordinated Notes due 2009; net of
an increase in gross interest during the 2001 period in connection with our term
loan facility. The decrease in the capitalization of interest during the 2001
period was primarily due to the lower level of construction in process
associated with our satellites and launch vehicles.
10
Six Months Ended June 30, 2001 Compared with Six Months Ended June 30, 2000
We had net losses of $116,157 and $59,603 for the six months ended June
30, 2001 and 2000, respectively. Our total operating expenses were $85,968 and
$55,644 for the six months ended June 30, 2001 and 2000, respectively.
Engineering design and development costs were $31,765 and $33,974 for
the six months ended June 30, 2001 and 2000, respectively. These engineering
costs represented primarily payments to Agere Systems, Inc. (45% in the 2001
period and 52% in the 2000 period) and other radio development and manufacturing
partners (24% in the 2001 period and 26% in the 2000 period). The decrease in
costs in the 2001 period was due to lower payments in connection with our chip
set development effort and from the completion of most activity relating to the
development of radios capable of receiving our broadcasts.
General and administrative expenses increased for the six months ended
June 30, 2001 to $41,614 from $17,928 for the six months ended June 30, 2000.
General and administrative expenses increased principally due to the growth of
our workforce, operation of our terrestrial repeater network, depreciation of
our broadcast studio equipment and the cost of in-orbit insurance for our three
satellites during the entire 2001 period. The major components of general and
administrative expenses in the 2001 period were salaries and employment related
costs (23%), rent and occupancy costs (16%) and marketing costs (13%), while in
the 2000 period the major components were salaries and employment related costs
(37%), rent and occupancy costs (16%) and marketing costs (13%). The remaining
portion of general and administrative expenses (48% in the 2001 period and 34%
in the 2000 period) consisted of other costs such as legal and regulatory,
insurance, consulting, travel, depreciation and supplies, with only insurance
(14%) exceeding 10% of the total in the 2001 period and no such amount exceeding
10% of the total in the 2000 period.
Non-cash stock compensation charge increased for the six months ended
June 30, 2001 to $12,589 from $3,742 for the six months ended June 30, 2000. The
increase in charges in the 2001 period resulted primarily from the charge
associated with the repricing of certain employee stock options in April 2001.
We expect to record future non-cash stock compensation charges or benefits based
on the market value of our common stock at the end of each reporting period.
The decrease in interest and investment income to $9,376 for the six
months ended June 30, 2001, from $14,426 for the six months ended June 30, 2000,
was the result of a lower average balance of cash, cash equivalents and
marketable securities and lower rates of return on our investments in U.S.
government securities and commercial paper issued by major U.S. corporations
during the 2001 period.
Interest expense was $39,565 for the six months ended June 30, 2001 and
$18,385 for the six months ended June 30, 2000, net of capitalized interest of
$9,073 and $37,699, respectively. Gross interest expense for the 2001 period
decreased by $7,446 and capitalized interest decreased by $28,626, compared to
the 2000 period. The decrease in gross interest from the prior period was due to
the expense incurred during the 2000 period related to the induced conversion of
our 8-3/4% Convertible Subordinated Notes due 2009; net of an increase in gross
interest during the 2001 period in connection with our term loan facility. The
decrease in the capitalization of interest during the 2001 period was primarily
due to the lower level of construction in process associated with our satellites
and launch vehicles.
11
Liquidity and Capital Resources
At June 30, 2001, we had cash, cash equivalents, marketable securities
and restricted investments totaling $444,782 and working capital of $420,877
compared with cash, cash equivalents, marketable securities and restricted
investments totaling $185,060 and working capital of $143,981 at December 31,
2000.
Funding Requirements. We entered into a satellite contract (the "Loral
Satellite Contract") with Space Systems/Loral, Inc. ("Loral") to build and
launch the satellites necessary to transmit our service. The Loral Satellite
Contract requires Loral to:
o construct, launch and deliver three satellites in-orbit and
checked-out;
o construct a fourth satellite for use as a spare; and
o deliver $15,000 of long-lead time parts for a possible fifth
satellite.
We are committed to make aggregate payments of approximately $745,890 under the
Loral Satellite Contract. As of June 30, 2001, $683,390 of this obligation had
been satisfied. Our future payments due to Loral are as follows: $12,500 in
2001, $0 in 2002, $25,000 in 2003 and $25,000 in 2004. The amount and timing of
our future payments to Loral depends upon the completion of construction of our
fourth satellite.
The amount and timing of our other cash requirements will depend upon
numerous factors, including costs associated with the design and development of
chip sets and radios, the rate of growth of our business after we commence
service, costs of financing and the possibility of unanticipated costs.
Sources of Funding. To date, we have funded our capital needs through
the issuance of debt and equity securities.
As of June 30, 2001, we had received a total of approximately
$1,103,300 in equity capital as a result of the following transactions:
o the sale of shares of our common stock (net proceeds of approximately
$22,000) prior to the issuance of our FCC license in October 1997;
o the sale of 5,400,000 shares of our 5% Delayed Convertible Preferred
Stock (net proceeds of approximately $121,000) in April 1997 (in
November 1997, we exchanged 1,846,799 shares of our 10-1/2% Series C
Convertible Preferred Stock for all the outstanding shares of our 5%
Delayed Convertible Preferred Stock) (all shares of our 10-1/2% Series
C Convertible Preferred Stock have since been converted into shares of
our common stock);
o the sale of 4,955,488 shares of our common stock (net proceeds of
approximately $71,000) in 1997;
o the sale of 5,000,000 shares of our common stock to Prime 66 Partners,
L.P. (net proceeds of approximately $98,000) in November 1998;
o the sale of 1,350,000 shares of our 9.2% Series A Junior Cumulative
Convertible Preferred Stock to Apollo Investment Fund IV, L.P. and
Apollo Overseas Partners IV, L.P. (collectively, the "Apollo
Investors") (net proceeds of approximately $129,000) in December 1998;
12
o the sale of 650,000 shares of our 9.2% Series B Junior Cumulative
Convertible Preferred Stock to the Apollo Investors (net proceeds of
approximately $63,000) in November 1999;
o the sale of 3,450,000 shares of our common stock in an underwritten
public offering (net proceeds of approximately $78,000) in September
and October 1999;
o the sale of 2,000,000 shares of our 9.2% Series D Junior Cumulative
Convertible Preferred Stock to affiliates of The Blackstone Group L.P.
(net proceeds of approximately $192,000) in January 2000;
o the sale of 2,290,322 shares of our common stock to DaimlerChrysler
Corporation (net proceeds of approximately $100,000) in February 2000;
and
o the sale of 11,500,000 shares of our common stock in an underwritten
public offering (net proceeds of approximately $229,300) in February
2001.
As of June 30, 2001, we had received a total of approximately $443,000 in net
proceeds from the following public debt offerings:
o 12,910 units, each consisting of $20 aggregate principal amount at
maturity of our 15% Senior Secured Discount Notes due 2007 and a
warrant to purchase additional 15% Senior Secured Discount Notes due
2007 with an aggregate principal amount at maturity of $3 in an
underwritten public offering (net proceeds of approximately $116,000)
in November 1997. All of these warrants were exercised in 1997. The
aggregate value at maturity of our 15% Senior Secured Discount Notes
due 2007 is approximately $297,000. Our 15% Senior Secured Discount
Notes due 2007 mature on December 1, 2007 and the first cash interest
payment is due in June 2003.
o 200,000 units, each consisting of $1 aggregate principal amount of our
14-1/2% Senior Secured Notes due 2009 and three warrants, each to
purchase 4.189 shares of our common stock (as of June 30, 2001) in an
underwritten public offering (net proceeds of approximately $190,000)
in May 1999. The warrants are exercisable through May 15, 2009 at an
exercise price of $24.92 per share (as of June 30, 2001). We invested
approximately $79,300 of the net proceeds from this offering in a
portfolio of U.S. government securities, which we pledged as security
for payment in full of interest due on the 14-1/2% Senior Secured
Notes due 2009 through May 15, 2002.
o $125,000 aggregate principal amount of our 8-3/4% Convertible
Subordinated Notes due 2009 in an underwritten public offering (net
proceeds of approximately $119,000) in September 1999. In October
1999, we issued an additional $18,750 aggregate principal amount of
our 8-3/4% Convertible Subordinated Notes due 2009 to the underwriters
of that offering in connection with their over-allotment option (net
proceeds of approximately $18,000).
The indentures governing our 14-1/2% Senior Secured Notes due 2009 and
our 15% Senior Secured Discount Notes due 2007 contain limitations on our
ability to issue additional debt. These notes are secured by a pledge of
the stock of Satellite CD Radio, Inc., our subsidiary that holds our FCC
license. As of June 30, 2001, we had acquired $62,914 principal amount of our
8-3/4% Convertible Subordinated Notes due 2009 in exchange for shares of our
common stock.
13
Loral has deferred a total of $50,000 of payments under the Loral
Satellite Contract originally scheduled for payment in 1999. These deferred
amounts bear interest at 10% per year and were originally scheduled to be paid
in quarterly installments beginning in June 2002. However, the agreement
governing these deferred amounts provides that this date, and subsequent payment
dates, will be extended by the number of days that the achievement of any
milestone under the Loral Satellite Contract is delayed beyond the dates set
forth in the Loral Satellite Contract. Our fourth, spare, satellite was
originally expected to be delivered to ground storage in October 2000 and now is
expected to be delivered to ground storage in October 2001. As a result of this
delay, we do not expect to make any required payments with respect to these
deferred payments until June 2003, at the earliest. As security for these
deferred payments, we have granted Loral a security interest in our terrestrial
repeater network.
On June 1, 2000, we entered into a term loan agreement with Lehman
Commercial Paper Inc. ("LCPI") and Lehman Brothers Inc. On March 7, 2001, after
satisfaction of the conditions to borrowing, including a demonstration of our
broadcast system, we borrowed $150,000 of term loans from LCPI under this
agreement. These term loans bear interest at an annual rate equal to the
eurodollar rate plus 4% or a base rate, typically the prime rate, plus 5%. These
term loans are secured by a pledge of the stock of Satellite CD Radio, Inc., our
subsidiary that holds our FCC license, and our rights under the Loral Satellite
Contract relating to our fourth, spare, satellite.
The term loans mature in quarterly installments, commencing on March
31, 2003, in an amount equal to the percentage set forth below of the aggregate
principal amount of the loans:
Installment Percentage
----------- ----------
March 31, 2003............................ 0.25%
June 30, 2003............................. 0.25%
September 30, 2003........................ 0.25%
December 31, 2003......................... 0.25%
March 31, 2004............................ 2.25%
June 30, 2004............................. 2.25%
September 30, 2004........................ 2.25%
December 31, 2004......................... 2.25%
March 31, 2005............................ 22.50%
June 30, 2005............................. 22.50%
September 30, 2005........................ 22.50%
December 31, 2005......................... 22.50%
We may prepay the term loans in whole at any time or in part from time
to time. Prepayment prior to March 7, 2004 must be accompanied by a specified
prepayment penalty. We must prepay the term loans:
o with the net proceeds of certain incurrences of indebtedness;
o with the proceeds of asset sales, subject to certain exceptions; and
o commencing with the fiscal year ending December 31, 2002, with excess
cash.
14
The term loan facility contains customary covenants and events of
default for a senior secured bank loan. These covenants restrict our ability to
issue additional debt and engage in certain activities.
In connection with this term loan facility, we granted LCPI 2,100,000
warrants, each to purchase one share of our common stock, at an exercise price
of $29.00 per share.
Shares of our 9.2% Series A Junior Cumulative Convertible Preferred
Stock and 9.2% Series B Junior Cumulative Convertible Preferred Stock are
convertible into shares of our common stock at a price of $30.00 per share.
Dividends on our 9.2% Series A Junior Cumulative Convertible Preferred Stock and
9.2% Series B Junior Cumulative Convertible Preferred Stock are payable in kind
or in cash annually, at our option. Holders of our 9.2% Series A Junior
Cumulative Convertible Preferred Stock and 9.2% Series B Junior Cumulative
Convertible Preferred Stock have the right to vote, on an as-converted basis, on
matters on which the holders of our common stock have the right to vote. Shares
of our 9.2% Series A Junior Cumulative Convertible Preferred Stock and 9.2%
Series B Junior Cumulative Convertible Preferred Stock:
o are callable by us beginning November 15, 2001 at a price of 100% if
the current market price, as defined in the certificates of
designation of the 9.2% Series A Junior Cumulative Convertible
Preferred Stock and 9.2% Series B Junior Cumulative Convertible
Preferred Stock, of our common stock exceeds $60.00 per share for a
period of 20 consecutive trading days;
o will be callable in all events beginning November 15, 2003 at a price
of 100%; and
o must be redeemed by us on November 15, 2011.
Shares of our 9.2% Series D Junior Cumulative Convertible Preferred
Stock are convertible into shares of our common stock at a price of $34.00 per
share. Dividends on our 9.2% Series D Junior Cumulative Convertible Preferred
Stock are payable in kind or in cash annually, at our option. Holders of our
9.2% Series D Junior Cumulative Convertible Preferred Stock have the right to
vote, on an as-converted basis, on matters in which the holders of our common
stock have the right to vote. Shares of our 9.2% Series D Junior Cumulative
Convertible Preferred Stock:
o are callable by us beginning December 23, 2002 at a price of 100% if
the current market price, as defined in the certificate of designation
of the 9.2% Series D Junior Cumulative Convertible Preferred Stock, of
our common stock exceeds $68.00 per share for a period of 20
consecutive trading days;
o will be callable in all events beginning December 23, 2004 at a price
of 100%; and
o must be redeemed by us on November 15, 2011.
As of August 8, 2001, we had sufficient funds to operate our business
through the third quarter of 2002. We will require additional funds to support
our planned operations through the remainder of 2002 and thereafter until our
revenues grow substantially. We plan to fund our additional capital needs
through the issuance of debt and equity securities.
15
Part II
Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
See Exhibit Index attached hereto.
(b) Reports on Form 8-K:
None.
16
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
SIRIUS SATELLITE RADIO INC.
By: /s/ Edward Weber, Jr.
-----------------------------------
Edward Weber, Jr.
Vice President and Controller
(Principal Accounting Officer)
August 14, 2001
17
Exhibit Index
Exhibit Description
------- -----------
3.1.1 Certificate of Amendment, dated June 16, 1997, to the Company's
Certificate of Incorporation and the Company's Amended and Restated
Certificate of Incorporation, dated January 31, 1994 (incorporated by
reference to Exhibit 3.1 to the Company's Quarterly Report on Form 10-Q
for the quarter ended June 30, 1999).
3.1.2 Certificate of Ownership and Merger merging Sirius Satellite Radio Inc.
into CD Radio Inc. dated November 18, 1999 (incorporated by reference to
Exhibit 4.1 to the Company's Registration Statement on Form S-8 (File
No. 333-31362)).
3.2 Amended and Restated By-Laws (incorporated by reference to Exhibit 3.2
to the Company's Registration Statement on Form S-1 (File No. 33-74782)
(the "S-1 Registration Statement")).
3.3 Certificate of Designations of 5% Delayed Convertible Preferred Stock
(incorporated by reference to Exhibit 10.24 to the Company's Annual
Report on Form 10-K/A for the year ended December 31, 1996 (the "1996
Form 10-K")).
3.4 Form of Certificate of Designations of Series B Preferred Stock
(incorporated by reference to Exhibit A to Exhibit 1 to the Company's
Registration Statement on Form 8-A filed on October 30, 1997 (the "Form
8-A")).
3.5.1 Form of Certificate of Designations, Preferences and Relative,
Participating, Optional and Other Special Rights of 10 1/2% Series C
Convertible Preferred Stock (the "Series C Certificate of Designations")
(incorporated by reference to Exhibit 4.1 to the Company's Registration
Statement on Form S-4 (File No. 333-34761)).
3.5.2 Certificate of Correction to Series C Certificate of Designations
(incorporated by reference to Exhibit 3.5.2 to the Company's Annual
Report on Form 10-K for the year ended December 31, 1997 (the "1997 Form
10-K")).
3.5.3 Certificate of Increase of 10 1/2% Series C Convertible Preferred Stock
(incorporated by reference to Exhibit 3.5.3 to the Company's Quarterly
Report on Form 10-Q for the quarter ended March 31, 1998).
3.6 Certificate of Designations, Preferences and Relative, Participating,
Optional and Other Special Rights of the Company's 9.2% Series A Junior
Cumulative Convertible Preferred Stock (incorporated by reference to
Exhibit 3.6 to the Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1999).
3.7 Certificate of Designations, Preferences and Relative, Participating,
Optional and Other Special Rights of the Company's 9.2% Series B Junior
Cumulative Convertible Preferred Stock (incorporated by reference to
Exhibit 3.7 to the Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1999).
Exhibit Description
------- -----------
3.8 Certificate of Designations, Preferences and Relative, Participating,
Optional and Other Special Rights of the Company's 9.2% Series D Junior
Cumulative Convertible Preferred Stock (incorporated by reference to
Exhibit 99.2 to the Company's Current Report on Form 8-K filed on
December 29, 1999).
4.1 Form of certificate for shares of Common Stock (incorporated by
reference to Exhibit 4.3 to the S-1 Registration Statement).
4.2 Form of certificate for shares of 10 1/2% Series C Convertible Preferred
Stock (incorporated by reference to Exhibit 4.4 to the Company's
Registration Statement on Form S-4 (File No. 333-34761)).
4.3 Form of certificate for shares of 9.2% Series A Junior Cumulative
Convertible Preferred Stock (incorporated by reference to Exhibit 4.10.1
to the Company's Annual Report on Form 10-K for the year ended December
31, 1998 (the "1998 Form 10-K")).
4.4 Form of certificate for shares of 9.2% Series B Junior Cumulative
Convertible Preferred Stock (incorporated by reference to Exhibit 4.10.2
to the 1998 Form 10-K).
4.5 Form of certificate for shares of 9.2% Series D Junior Cumulative
Convertible Preferred Stock (incorporated by reference to Exhibit 4.5 to
the Company's Annual Report on Form 10-K for the year ended December 31,
1999 (the "1999 Form 10-K")).
4.6.1 Rights Agreement, dated as of October 22, 1997 (the "Rights Agreement"),
between the Company and Continental Stock Transfer & Trust Company, as
rights agent (incorporated by reference to Exhibit 1 to the Form 8-A).
4.6.2 Form of Right Certificate (incorporated by reference to Exhibit B to
Exhibit 1 to the Form 8-A).
4.6.3 Amendment to the Rights Agreement dated as of October 13, 1998
(incorporated by reference to Exhibit 99.2 to the Company's Current
Report on Form 8-K dated October 13, 1998).
4.6.4 Amendment to the Rights Agreement dated as of November 13, 1998
(incorporated by reference to Exhibit 99.7 to the Company's Current
Report on Form 8-K dated November 17, 1998).
4.6.5 Amended and Restated Amendment to the Rights Agreement dated as of
December 22, 1998 (incorporated by reference to Exhibit 6 to the
Amendment No. 1 to the Form 8-A filed on January 6, 1999).
4.6.6 Amendment to the Rights Agreement dated as of June 11, 1999
(incorporated by reference to Exhibit 4.1.8 to the Company's
Registration Statement on Form S-4 (File No. 333-82303) filed on July 2,
1999 (the "1999 Units Registration Statement")).
2
Exhibit Description
------- -----------
4.6.7 Amendment to the Rights Agreement dated as of September 29, 1999
(incorporated by reference to Exhibit 4.1 to the Company's Current
Report on Form 8-K filed on October 13, 1999).
4.6.8 Amendment to the Rights Agreement dated as of December 23, 1999
(incorporated by reference to Exhibit 99.4 to the Company's Current
Report on Form 8-K filed on December 29, 1999).
4.6.9 Amendment to the Rights Agreement dated as of January 28, 2000
(incorporated by reference to Exhibit 4.6.9 to the 1999 Form 10-K).
4.6.10 Amendment to the Rights Agreement dated as of August 7, 2000
(incorporated by reference to Exhibit 4.6.10 to the Company's Quarterly
Report on Form 10-Q for the quarter ended September 30, 2000).
4.7 Indenture, dated as of November 26, 1997, between the Company and IBJ
Schroder Bank & Trust Company, as trustee, relating to the Company's 15%
Senior Secured Discount Note due 2007 (incorporated by reference to
Exhibit 4.1 to the Company's Registration Statement on Form S-3 (File
No. 333-34769) (the "1997 Units Registration Statement")).
4.8 Form of 15% Senior Secured Discount Note due 2007 (incorporated by
reference to Exhibit 4.2 to the 1997 Units Registration Statement).
4.9 Amended and Restated Warrant Agreement, dated as of December 27, 2000,
between the Company and United States trust Company of New York, as
warrant agent and escrow agent (incorporated by reference to Exhibit
4.27 to the Company's Registration Statement on Form S-3 (File No.
333-65602)).
4.10 Warrant Agreement, dated as of November 26, 1997, between the Company
and IBJ Schroder Bank & Trust Company, as warrant agent (incorporated by
reference to Exhibit 4.3 to the 1997 Units Registration Statement).
4.11 Form of Warrant (incorporated by reference to Exhibit 4.4 to the 1997
Units Registration Statement).
4.12 Form of Preferred Stock Warrant Agreement, dated as of April 9, 1997,
between the Company and each warrantholder thereof (incorporated by
reference to Exhibit 4.12 to the 1997 Form 10-K).
4.13 Form of Common Stock Purchase Warrant granted by the Company to Everest
Capital Master Fund, L.P. and to The Ravich Revocable Trust of 1989
(incorporated by reference to Exhibit 4.11 to the 1997 Form 10-K).
3
Exhibit Description
------- -----------
4.14 Indenture, dated as of May 15, 1999, between the Company and United
States Trust Company of New York, as trustee, relating to the Company's
14 1/2% Senior Secured Notes due 2009 (incorporated by reference to
Exhibit 4.4.2 to the 1999 Units Registration Statement).
4.15 Form of 14 1/2% Senior Secured Note due 2009 (incorporated by reference
to Exhibit 4.4.2 to the 1999 Units Registration Statement).
4.16 Indenture, dated as of September 29, 1999, between the Company and
United States Trust Company of Texas, N.A., relating to the Company's
8 3/4% Convertible Subordinated Notes due 2009 (incorporated by
reference to Exhibit 4.2 to the Company's Current Report on Form 8-K
filed on October 13, 1999).
4.17 First Supplemental Indenture, dated as of September 29, 1999, between
the Company and United States Trust Company of Texas, N.A., relating to
the Company's 8 3/4% Convertible Subordinated Notes due 2009
(incorporated by reference to Exhibit 4.1 to the Company's Current
Report on Form 8-K filed on October 1, 1999).
4.18 Form of 83/4% Convertible Subordinated Note due 2009 (incorporated by
reference to Article VII of Exhibit 4.01 to the Company's Current Report
on Form 8-K filed on October 11, 1999).
4.19 Warrant Agreement, dated as of May 15, 1999, between the Company and
United States Trust Company of New York, as warrant agent (incorporated
by reference to Exhibit 4.4.4 to the 1999 Units Registration Statement).
4.20 Amended and Restated Pledge Agreement, dated as of May 15, 1999, among
the Company, as pledgor, IBJ Whitehall Bank & Trust Company, as trustee,
United States Trust Company of New York, as trustee, and IBJ Whitehall
Bank & Trust Company, as collateral agent (incorporated by reference to
Exhibit 4.4.5 to the 1999 Units Registration Statement).
4.21 Collateral Pledge and Security Agreement, dated as of May 15, 1999,
between the Company, as pledgor, and United States Trust Company of New
York, as trustee (incorporated by reference to Exhibit 4.4.6 to the 1999
Units Registration Statement).
4.22 Intercreditor Agreement, dated May 15, 1999, by and between IBJ
Whitehall Bank & Trust Company, as trustee, and United States Trust
Company of New York, as trustee (incorporated by reference to Exhibit
4.4.7 to the 1999 Units Registration Statement).
4
Exhibit Description
------- -----------
4.23 Term Loan Agreement, dated as of June 1, 2000, among the Company, Lehman
Brothers Inc., as arranger, Lehman Commercial Paper Inc., as syndication
and administrative agent (incorporated by reference to Exhibit 4.22 to
the Company's Quarterly Report on Form 10-Q for the quarter ended June
30, 2000).
4.24 Term Loan Agreement, dated as of February 23, 2001, among the Company
and Lehman Brothers Inc. (incorporated by reference to Exhibit 1.01 to
Company's Current Report on Form 8-K filed on February 28, 2001).
4.25 Warrant Agreement, dated as of June 1, 2000, between the Company and
United States Trust Company of New York, as warrant agent and escrow
agent (incorporated by reference to Exhibit 4.23 to the Company's
Quarterly Report on Form 10-Q for the quarter ended June 30, 2000).
4.26 Common Stock Purchase Warrant granted by the Company to Ford Motor
Company, dated June 11, 1999 (incorporated by reference to Exhibit 4.4.2
to the 1999 Units Registration Statement).
4.27 Common Stock Purchase Warrant granted by the Company to DaimlerChrysler
Corporation, dated January 28, 2000 (incorporated by reference to
Exhibit 4.23 to the 1999 Form 10-K).
9.1 Voting Trust Agreement, dated as of August 26, 1997, by and among
Darlene Friedland, as Grantor, David Margolese, as Trustee, and the
Company (incorporated by reference to Exhibit (c) to the Company's
Issuer Tender Offer Statement on Form 13E-4 filed on October 16, 1997).
10.1.1 Lease Agreement, dated as of March 31, 1998, between Rock-McGraw, Inc.
and the Company (incorporated by reference to Exhibit 10.1.2 to the
Company's Quarterly Report on Form 10-Q for the quarter ended June 30,
1998).
10.1.2 Supplemental Indenture, dated as of March 22, 2000, between Rock-McGraw,
Inc. and the Company (incorporated by reference to Exhibit 10.1.2 to the
Company's Quarterly Report on Form 10-Q for the quarter ended March 31,
2000).
'D'10.2 Amended and Restated Contract, dated as of June 30, 1998, between the
Company and Space Systems/Loral, Inc. (incorporated by reference to
Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q/A for the
quarter ended June 30, 1998).
*10.3 Employment Agreement, dated as of January 1, 1999, between the Company
and David Margolese (incorporated by reference to Exhibit 10.6 to the
1998 Form 10-K).
5
Exhibit Description
------- -----------
*10.4 Employment Agreement, dated as of March 28, 2000, between the Company
and Joseph S. Capobianco (incorporated by reference to Exhibit 10.5 to
the 1999 Form 10-K).
*10.5 Employment Agreement, dated as of March 28, 2000, between the Company
and Patrick L. Donnelly (incorporated by reference to Exhibit 10.6 to
the 1999 Form 10-K).
*10.6 Employment Agreement, dated as of April 17, 2000, between the Company
and Dr. Mircho Davidov (incorporated by reference to Exhibit 10.8 to the
Company's Quarterly Report on Form 10-Q for the quarter ended March 31,
2000).
*10.7 Employment Agreement, dated as of March 7, 2001, between the Company and
John Scelfo (incorporated by reference to Exhibit 10.7 to the Company's
Quarterly Report on Form 10-Q for the quarter ended March 31, 2001).
10.8 Registration Agreement, dated January 2, 1994, between the Company and
M.A. Rothblatt and B.A. Rothblatt (incorporated by reference to Exhibit
10.20 to the S-1 Registration Statement).
*10.9 1994 Stock Option Plan (incorporated by reference to Exhibit 10.21 to
the S-1 Registration Statement).
*10.10 Amended and Restated 1994 Directors' Nonqualified Stock Option Plan
(incorporated by reference to Exhibit 10.22 to the Company's Annual
Report on Form 10-K for the year ended December 31, 1995).
*10.11 CD Radio Inc. 401(k) Savings Plan (incorporated by reference to Exhibit
4.4 to the Company's Registration Statement on Form S-8 (File No.
333-65473)).
*10.12 Sirius Satellite Radio 1999 Long-Term Stock Incentive Plan (incorporated
by reference to Exhibit 4.4 of the Company's Registration Statement on
Form S-8 (File No. 333-31362)).
10.13 Form of Option Agreement, dated as of December 29, 1997, between the
Company and each Optionee (incorporated by reference to Exhibit 10.16.2
to the Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1998).
10.14 Letter, dated May 29, 1998, terminating Launch Services Agreement dated
July 22, 1997 between the Company and Arianespace S.A.; Arianespace
Customer Loan Agreements dated July 22, 1997 for Launches #1 and #2
between the Company and Arianespace Finance S.A.; and the Multiparty
Agreements dated July 22, 1997 for Launches #1 and #2 among the Company,
Arianespace S.A. and Arianespace Finance S.A. (incorporated by reference
to Exhibit 10.21 to the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1998).
10.15 Summary Term Sheet/Commitment, dated June 15, 1997, among the Company
and Everest Capital International, Ltd., Everest Capital Fund, L.P. and
The Ravich Revocable Trust of 1989 (incorporated by reference to Exhibit
99.1 to the Company's Current Report on Form 8-K filed on July 8, 1997).
6
Exhibit Description
------- -----------
10.16.1 Engagement Letter Agreement, dated June 14, 1997, between the Company
and Libra Investments, Inc. (incorporated by reference to Exhibit
10.26.1 to the 1997 Form 10-K).
10.16.2 Engagement Letter Agreement, dated August 6, 1997, between the Company
and Libra Investments, Inc. (incorporated by reference to Exhibit
10.26.2 to the 1997 Form 10-K).
10.17 Radio License Agreement, dated January 21, 1998, between the Company
and Bloomberg Communications Inc. (incorporated by reference to
Exhibit 10.28 to the Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1998).
'D'10.18 Amended and Restated Agreement, dated as of February 1, 1999, between
Lucent Technologies Inc. and the Company (incorporated by reference to
Exhibit 99.1 to the Company's Current Report on Form 8-K filed on
February 4, 1999).
10.19 Stock Purchase Agreement, dated as of October 8, 1998, between the
Company and Prime 66 Partners, L.P. (incorporated by reference to
Exhibit 99.1 to the Company's Current Report on Form 8-K dated October
8, 1998).
10.20.1 Stock Purchase Agreement, dated as of November 13, 1998 (the "Apollo
Stock Purchase Agreement"), by and among the Company, Apollo
Investment Fund IV, L.P. and Apollo Overseas Partners IV, L.P.
(incorporated by reference to Exhibit 99.1 to the Company's Current
Report on Form 8-K dated November 17, 1998).
10.20.2 Amendment No. 1, dated as of December 23, 1998, to the Apollo Stock
Purchase Agreement (incorporated by reference to Exhibit 10.28.2 to
the Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1999).
10.20.3 Second Amendment, dated as of December 23, 1999, to the Apollo Stock
Purchase Agreement (incorporated by reference to Exhibit 99.3 to the
Company's Current Report on Form 8-K filed on December 29, 1999).
10.21 Stock Purchase Agreement, dated as of December 23, 1999 (the
"Blackstone Stock Purchase Agreement"), by and between the Company and
Blackstone Capital Partners III Merchant Banking Fund L.P.
(incorporated by reference to Exhibit 99.1 to the Company's Current
Report on Form 8-K filed on December 29, 1999).
10.22 Stock Purchase Agreement, dated as of January 28, 2000, among the
Company, Mercedes-Benz USA, Inc., Freightliner Corporation and
DaimlerChrysler Corporation (incorporated by reference to Exhibit
10.24 to the 1999 Form 10-K).
10.23 Tag-Along Agreement, dated as of November 13, 1998, by and among
Apollo Investment Fund IV, L.P., Apollo Overseas Partners IV, L.P.,
the Company and David Margolese (incorporated by reference to Exhibit
99.6 to the Company's Current Report on Form 8-K dated November 17,
1998).
'D'10.24 Agreement, dated as of June 11, 1999, between the Company and Ford
Motor Company (incorporated by reference to Exhibit 10.33 to the
Company's Quarterly Report on Form 10-Q for the quarter ended June 30,
1999).
7
Exhibit Description
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'D'10.25 Joint Development Agreement, dated as of February 16, 2000, between
the Company and XM Satellite Radio Inc. (incorporated by reference to
Exhibit 10.28 to the Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 2000).
-----------------
* This document has been identified as a management contract or compensatory
plan or arrangement.
'D' Portions of these exhibits have been omitted pursuant to Applications for
Confidential treatment filed by the Company with the Securities and
Exchange Commission.
8
STATEMENT OF DIFFERENCES
The dagger symbol shall be expressed as.................................. 'D'