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 March 31, 2001
Commission file number 0-24710
SIRIUS SATELLITE RADIO INC.
---------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 52-1700207
---------------------------------------------------------------------------
(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
---------------------------------------------------------------------------
(Address of principal executive offices)
(Zip code)
212-584-5100
---------------------------------------------------------------------------
(Registrant's telephone number, including area code)
---------------------------------------------------------------------------
(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 53,843,369 shares
---------------------------------------------------------------------------
(Class) (Outstanding as of May 10, 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 month periods 1
ended March 31, 2001 and 2000 and for the period May 17, 1990 (date of
inception) to March 31, 2001
Consolidated Balance Sheets as of March 31, 2001 (unaudited) and 2
December 31, 2000
Consolidated Statements of Cash Flows (unaudited) for the three month periods 3
ended March 31, 2001 and 2000 and for the period May 17, 1990 (date of
inception) to March 31, 2001
Notes to Consolidated Financial Statements (unaudited) 4
Management's Discussion and Analysis of Financial Condition and Results 9
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)
Cumulative for
the period
For the Three Months Ended March 31, May 17, 1990
--------------------------------------- (date of inception)
2001 2000 to March 31, 2001
---------- --------- -------------------
Revenue $ - $ - $ -
Operating expenses:
Engineering design & development (17,686) (16,898) (128,236)
General and administrative (21,630) (9,878) (137,192)
Special charges - - (27,682)
-------- -------- ---------
Total operating expenses (39,316) (26,776) (293,110)
-------- -------- ---------
Other income (expense):
Interest and investment income 3,607 7,831 57,246
Interest expense, net (18,380) (5,866) (85,165)
-------- -------- ---------
(14,773) 1,965 (27,919)
-------- -------- ---------
Income (loss) before income taxes (54,089) (24,811) (321,029)
Income taxes:
Federal - - (1,982)
State - - (313)
-------- -------- ---------
Net loss (54,089) (24,811) (323,324)
-------- -------- ---------
Preferred stock dividends (10,165) (10,838) (102,015)
Preferred stock deemed dividends (169) (7,218) (75,615)
Accretion of dividends in connection
with the issuance of warrants on
preferred stock - (894) (7,704)
-------- -------- ---------
Net loss applicable to
common stockholders $(64,423) $(43,761) $(508,658)
======== ======== =========
Net loss per share applicable to
common stockholders (basic
and diluted) $ (1.34) $ (1.35)
======== ========
Weighted average common shares
outstanding (basic and diluted) 47,942 32,412
======== ========
The acompanying 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 per share amounts)
March 31, December 31,
2001 2000
-------------- ------------------
ASSETS (Unaudited)
Current assets:
Cash and cash equivalents $ 197,131 $ 14,397
Marketable securities, at market 263,275 129,153
Restricted investments, at amortized cost 42,066 41,510
Prepaid expense and other 13,513 13,288
----------- -----------
Total current assets 515,985 198,348
----------- -----------
Property and equipment 1,034,008 1,016,570
Less: accumulated depreciation (5,173) (3,105)
----------- -----------
1,028,835 1,013,465
Other assets:
FCC license 83,368 83,368
Debt issue cost, net 21,216 20,124
Deposits and other 5,558 8,277
----------- -----------
Total other assets 110,142 111,769
----------- -----------
Total assets $1,654,962 $1,323,582
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 44,720 $ 45,057
Satellite construction payable - 9,310
----------- -----------
Total current liabilities 44,720 54,367
Long-term notes payable and accrued interest 621,189 472,602
Deferred satellite payments and accrued interest 62,382 60,881
Deferred income taxes 2,237 2,237
----------- -----------
Total liabilities 730,528 590,087
----------- -----------
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 March 31, 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 March 31, 2001 and December 31, 2000 (liquidation
preference of $159,571), at net carrying value including accrued dividends 165,972 162,380
9.2% Series B Junior Cumulative Convertible Preferred Stock, $.001 par
value: 2,100,000 shares authorized, 715,703 shares issued and
outstanding at March 31, 2001 and December 31, 2000 (liquidation
preference of $71,570), at net carrying value including accrued dividends 72,173 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 March 31, 2001 and December 31, 2000 (liquidation preference of
$214,569), at net carrying value including accrued dividends 215,201 210,125
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,
53,728,723 and 42,107,957 shares issued and outstanding at
March 31, 2001 and December 31, 2000, respectively 54 42
Additional paid-in capital 794,358 559,676
Deficit accumulated during the development stage (323,324) (269,235)
------------- -----------
Total stockholders' equity 471,088 290,483
------------- -----------
Total liabilities and stockholders' equity $ 1,654,962 $1,323,582
============= ===========
The acompanying 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 Three Months Ended the period
March 31, May 17, 1990
----------------------------------- (date of inception)
2001 2000 to March 31, 2001
---------------- -------------- --------------------
Cash flows from development stage activities:
Net loss $ (54,089) $(24,811) $(323,324)
Adjustments to reconcile net loss to net cash provided by
(used in) development stage activities:
Depreciation expense 2,068 471 5,584
Decrease (increase) in gain on marketable securities 1,354 (448) (922)
Loss on disposal of assets - 249 364
Special charges - - 25,557
Accretion of note payable charged as interest expense 21,234 19,517 182,038
Compensation expense in connection with
issuance of common stock and stock options 942 1,730 12,660
Expense incurred in connection with conversion of debt - - 14,431
Increase (decrease) in cash and cash equivalents resulting
from changes in assets and liabilities:
Prepaid expense and other (225) 13 (13,513)
Due to related party - - 351
Other assets 5,271 160 280
Accounts payable and accrued expenses (7,656) (3,942) (21,110)
Deferred taxes - - 2,237
----------- ----------- ----------
Net cash used in development stage activities (31,101) (7,061) (115,367)
----------- ----------- ----------
Cash flows from investing activities:
Sales (purchases) of marketable securities and restricted
investments, net (135,476) (100,850) (304,465)
Purchase of FCC license - - (83,368)
Purchases of property and equipment (25,247) (90,886) (999,249)
Acquisition of Sky-Highway Radio Corp. - - (2,000)
----------- ----------- -----------
Net cash used in investing activities (160,723) (191,736) (1,389,082)
----------- ----------- -----------
Cash flows from financing activities:
Proceeds from issuance of notes payable 145,000 1,882 398,145
Proceeds from issuance of common stock, net 229,407 100,010 591,488
Proceeds from issuance of preferred stock, net - 192,450 505,418
Proceeds from exercise of stock options and warrants 151 3,919 15,181
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 374,558 182,304 1,701,580
----------- ----------- ----------
Net increase (decrease) in cash and cash equivalents 182,734 (16,493) 197,131
Cash and cash equivalents at the beginning of period 14,397 81,809 -
----------- ----------- ----------
Cash and cash equivalents at the end of period $ 197,131 $ 65,316 $ 197,131
=========== =========== ==========
The acompanying 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
Principal Business
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 intend
to 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.
Recent Developments
On February 23, 2001, we sold 11,500,000 shares of our common stock in an
underwritten public offering for net proceeds of approximately $229,300.
On March 7, 2001, we borrowed $150,000 under a term loan agreement with
Lehman Commercial Paper Inc. and Lehman Brothers Inc.
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, these 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. 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. Unrealized holding gains of $922 and $2,275 were reflected
in earnings at March 31, 2001 and December 31, 2000, respectively.
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 March 31, 2001 and December 31,
2000, we had an unrealized holding gain of $323 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 in process 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. 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 March 31, 2001 and
2000, approximately 17,770,000 and 28,892,000 common stock equivalents were
outstanding, respectively, and were excluded from the calculation of diluted net
loss per share, as they were antidilutive.
Recent Accounting Pronouncements
Statement of Financial Accounting Standards No. 133, "Accounting for
Derivative and Hedging Activities" ("SFAS No. 133"), as amended by Statement of
Financial Accounting Standards No. 137, "Accounting for Derivative Instruments
and Hedging Activities - Deferral of the Effective Date of FASB Statement No.
133", and Statement of Financial Accounting Standards No. 138, "Accounting for
Certain Derivative and Certain Hedging Activities", became effective on January
1, 2001. SFAS No. 133 requires companies to recognize all derivatives as either
assets or liabilities measured at fair value. The accounting for the change in
the fair value of a derivative depends on the use of the derivative and whether
or not it qualifies for hedge accounting. The adoption of SFAS No. 133 did not
have a material impact on our financial statements.
5
SIRIUS SATELLITE RADIO INC. AND SUBSIDIARY
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollar amounts in thousands, unless otherwise stated)
(Unaudited)
Reclassifications
Certain amounts in the prior years' financial statements have been
reclassified to conform to the current presentation.
3. Deferred Satellite Payments
Under an amended and restated contract (the "Loral Satellite Contract")
with Space Systems/Loral, Inc. ("Loral"), Loral has 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,
however, 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:
March 31, 2001 December 31, 2000
----------------- --------------------
15% Senior Secured Discount Notes due 2007 $227,558 $218,405
14-1/2% Senior Secured Notes due 2009 174,103 173,361
8-3/4% Convertible Subordinated Notes due 2009 80,836 80,836
Term Loan Facility 138,692 -
-------- --------
Long-term Notes Payable $621,189 $472,602
======== ========
5. Term Loan Facility
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%. As
of March 31, 2001, the interest rate on these term loans was 9.97%. These term
loans are secured by a pledge of the stock of Satellite CD Radio, Inc., our
6
SIRIUS SATELLITE RADIO INC. AND SUBSIDIARY
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollar amounts in thousands, unless otherwise stated)
(Unaudited)
subsidiary that holds our FCC license, and our rights under the Loral Satellite
Contract relating to our fourth, spare, satellite. The proceeds of these term
loans will be used for working capital, capital expenditures and general
corporate purposes.
In connection with this term loan facility, we placed into escrow, for
the benefit of LCPI, 2,100,000 warrants, each to purchase one share of our
common stock at an exercise price of $29.00 per share. The value of these
warrants at the time of issuance was approximately $11,879 and will be accreted
to interest expense over the life of the term loans. On April 4, 2001, these
warrants were released from escrow.
6. 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
March 31, 2001, $683,390 of this obligation had been satisfied. Under the Loral
Satellite Contract, with the exception of a payment made to Loral in March 1993,
payments are due in installments that commenced in April 1997 and will end in
October 2004. 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 future payments depends upon the
completion of construction of our fourth, spare, satellite.
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. As part of our arrangement with
Panasonic, during the first year of production of satellite 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 under
this agreement could approximate $70,000.
7. Engineering Design and Development
We have entered into an agreement with Agere Systems, Inc. (the
successor to the microelectronics group of Lucent Technologies, Inc. ("Agere"))
pursuant to which Agere has agreed to use commercially reasonable efforts to
deliver 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
7
SIRIUS SATELLITE RADIO INC. AND SUBSIDIARY
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollar amounts in thousands, unless otherwise stated)
(Unaudited)
manufacturers to design, develop and produce radios capable of receiving our
service and have agreed to pay certain costs associated with these radios. We
record expenses under these agreements as the work is performed. Total expenses
related to these agreements were $13,009 and $13,903 for the three month periods
ended March 31, 2001 and 2000, respectively, and $87,690 for the period May 17,
1990 (date of inception) to March 31, 2001.
8. Stock Option Plans
On April 9, 2001, the Compensation Committee of our Board of Directors
amended approximately 3,832,000 stock options with an exercise price greater
than $7.50 to cause such stock options to have an exercise price equal to $7.50.
David Margolese, our Chairman and Chief Executive, elected not to include any
options held by him in the repricing. The Compensation Committee, together with
its independent compensation consultant, Ernst & Young LLP, evaluated various
methods to motivate and retain our employees during this critical period. The
Compensation Committee concluded that repricing best served the near and
long-term interests of our stockholders. Other than the change in the exercise
price, no other changes to the terms of the original options were made. In
accordance with Financial Accounting Standards Board Interpretation No. 44,
"Accounting for Certain Transactions Involving Stock Compensation", an
interpretation of Accounting Principles Board Opinion No. 25, these modified
stock options will be accounted for as variable.
On May 11, 2001, the Compensation Committee of our Board of Directors
granted Mr. Margolese an option to purchase 1,500,000 shares of our common stock
at a price of $12.67 per share, the closing price of our common stock on that
day.
8
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 service 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.
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;
9
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
service;
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 will 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. We anticipate that 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 maintaining our broadcasting system and general and administrative costs.
Costs to acquire programming include payments to build and maintain an extensive
music library and royalty payments for broadcasting music. As of May 10, 2001,
we had 186 employees. On December 31, 2001, we expect to have approximately 250
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.
Results of Operations
Three Months Ended March 31, 2001 Compared with Three Months Ended
March 31, 2000
We had net losses of $54,089 and $24,811 for the three months ended
March 31, 2001 and 2000, respectively. Our total operating expenses were $39,316
and $26,776 for the three months ended March 31, 2001 and 2000, respectively.
10
Engineering design and development costs were $17,686 and $16,898 for
the three months ended March 31, 2001 and 2000, respectively. These engineering
costs represented primarily payments to Agere Systems, Inc. (39% in the 2001
period and 63% in the 2000 period) and other radio development and manufacturing
partners (34% in the 2001 period and 19% in the 2000 period). The increase in
costs in the 2001 period resulted primarily from the increased activity in our
radio development effort as we prepare to launch our service.
General and administrative expenses increased for the three months
ended March 31, 2001 to $21,630 from $9,878 for the three months ended March 31,
2000. General and administrative expenses increased principally due to the
growth of our workforce, expenses in connection with stock and stock options
granted to employees and consultants and in-orbit insurance for our three
satellites. The major components of general and administrative expenses in the
2001 period were salaries and employment related costs (25%), marketing costs
(16%) and rent and occupancy costs (15%), while in the 2000 period the major
components were salaries and employment related costs (46%), marketing costs
(13%) and rent and occupancy costs (15%). The remaining portion of general and
administrative expenses (44% in the 2001 period and 26% in the 2000 period)
consisted of other costs such as legal and regulatory, insurance, consulting,
travel, depreciation and supplies, with no such amount exceeding 10% of the
total in either 2001 or 2000.
The decrease in interest and investment income to $3,607 for the three
months ended March 31, 2001, from $7,831 for the three months ended March 31,
2000, was the result of a lower average balance of cash, cash equivalents and
marketable securities and a lower return on our investments in U.S. government
securities and commercial paper issued by major U.S. corporations with high
credit ratings during the 2001 period.
Interest expense was $18,380 for the three months ended March 31, 2001
and $5,866 for the three months ended March 31, 2000, net of capitalized
interest of $4,362 and $17,518, respectively. Gross interest expense for the
2001 period decreased by $642 and capitalized interest decreased by $13,156,
compared to the 2000 period. 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.
Liquidity and Capital Resources
At March 31, 2001, we had cash, cash equivalents, marketable securities
and restricted investments totaling $502,472 and working capital of $471,265
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 March 31, 2001, $683,390 of this obligation had
been satisfied. Under the Loral Satellite Contract, with the exception of a
payment made to Loral in March
11
1993, payments are made in installments that commenced in April 1997 and will
end in October 2004. 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 completion of our terrestrial repeater network,
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 March 31, 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 the 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;
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.
12
As of March 31, 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 March 31,
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 March 31, 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 incur additional indebtedness. These notes are secured by a pledge of
the stock of Satellite CD Radio, Inc., our subsidiary that holds our FCC
license. As of March 31, 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.
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 date 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 amounts 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
13
our fourth, spare, satellite. The proceeds of these term loans will be used for
working capital, capital expenditures and general corporate purposes.
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.
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
14
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 May 10, 2001, we had sufficient funds to operate our business
through the middle 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 5. Other Information
On May 10, 2001, Mr. Ralph V. Whitworth resigned from our Board of
Directors, citing other corporate obligations. The two vacancies on the Board
of Directors created by the resignation of Mr. Whitworth and the retirement of
Mr. Briskman will be filled by Leon Black, Chairman of Apollo Management, and
Peter G. Peterson, Chairman of The Blackstone Group L.P.
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)
May 15, 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 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).
4.10 Form of Warrant (incorporated by reference to Exhibit 4.4 to the
1997 Units Registration Statement).
4.11 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).
4.12 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).
4.13 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).
4.14 Form of 14 1/2% Senior Secured Note due 2009 (incorporated by
reference to Exhibit 4.4.2 to the 1999 Units Registration
Statement).
4.15 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).
3
Exhibit Description
- ------- -----------
4.16 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).
4.17 Form of 8 3/4% 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).
4.18 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).
4.19 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).
4.20 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).
4.21 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).
4.22 Term Loan Agreement, dated as of June 1, 2000, among the Company,
Lehman Brothers Inc., as arranger, and 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).
4.23 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).
4.24 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).
4.25 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
Exhibit Description
- ------- -----------
4.26 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).
*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 (filed herewith).
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).
5
Exhibit Description
- ------- -----------
*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).
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).
6
Exhibit Description
- ------- -----------
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).
'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.
STATEMENT OF DIFFERENCES
The dagger symbol shall be expressed as..................................'D'