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 September 30, 2000
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 42,098,794 SHARES
(Class) (Outstanding as of November 10, 2000)
SIRIUS SATELLITE RADIO INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
INDEX
Part I - Financial Information
Page
Consolidated Statements of Operations (unaudited) for the three and 1
nine month periods ended September 30, 2000 and 1999 and for
the period May 17, 1990 (date of inception) to September 30, 2000
Consolidated Balance Sheets as of September 30, 2000 (unaudited) 2
and December 31, 1999
Consolidated Statements of Cash Flows (unaudited) for the nine 3
month periods ended September 30, 2000 and 1999 and for the
period May 17, 1990 (date of inception) to September 30, 2000
Notes to Consolidated Financial Statements (unaudited) 4
Management's Discussion and Analysis of Financial Condition and 6
Results of Operations
Part II - Other Information 13
Signatures 14
SIRIUS SATELLITE RADIO INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
Cumulative for
For the Three Months For the Nine Months the period
Ended Sept. 30, Ended Sept.30, May 17, 1990
------------------------- -------------------------- (date of inception)
2000 1999 2000 1999 to Sept. 30, 2000
---------- ----------- ----------- ----------- -------------------
Revenue $ - $ - $ - $ - $ -
Operating expenses:
Engineering design and development (17,476) (7,188) (51,630) (21,532) (91,180)
General and administrative (14,343) (5,744) (35,833) (17,162) (96,761)
Special charges - - - - (27,682)
---------- ---------- ----------- ---------- -------------
Total operating expenses (31,819) (12,932) (87,463) (38,694) (215,623)
---------- ---------- ----------- ---------- -------------
Other income (expense):
Interest and investment income 6,265 3,809 20,691 10,209 49,845
Interest expense (5,616) (4,000) (24,001) (7,683) (57,191)
---------- ---------- ----------- ---------- -------------
649 (191) (3,310) 2,526 (7,346)
---------- ---------- ----------- ---------- -------------
Loss before income taxes (31,170) (13,123) (90,773) (36,168) (222,969)
Income taxes:
Federal - - - - (1,982)
State - - - - (313)
--------- ---------- ----------- ---------- -------------
Net loss (31,170) (13,123) (90,773) (36,168) (225,264)
--------- ---------- ----------- ---------- -------------
Preferred stock dividends (9,547) (7,721) (29,871) (22,573) (81,910)
Preferred stock deemed dividends (166) (2,300) (8,082) (6,834) (75,268)
Accretion of dividends in connection
with the issuance of warrants on
preferred stock - (77) (900) (225) (7,704)
---------- ---------- ----------- ---------- -------------
Net loss applicable to common
stockholders $ (40,883) $ (23,221) $ (129,626) $ (65,800) $ (390,146)
=========== =========== =========== ========== =============
Net loss per share applicable to
common stockholders (basic and
diluted) $ (0.97) $ (0.96) $ (3.42) $ (2.79)
========== =========== =========== ==========
Weighted average common shares
outstanding (basic and diluted) 42,001 24,095 37,924 23,575
========== =========== =========== ==========
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)
September 30, December 31,
2000 1999
------------------ -------------------
ASSETS (unaudited)
Current assets:
Cash and cash equivalents $ 8,814 $ 81,809
Marketable securities, at market 229,132 317,810
Restricted investments, at amortized cost 55,363 67,454
Prepaid expenses and other 7,924 741
------------------ -------------------
Total current assets 301,233 467,814
------------------ -------------------
Property and equipment, at cost:
Satellites and launch vehicles 855,787 574,679
Broadcast studio equipment 17,486 15,731
Leasehold improvements 18,379 15,285
Technical equipment and other 35,686 18,653
------------------ -------------------
927,338 624,348
Less: accumulated depreciation (2,342) (880)
------------------ -------------------
924,996 623,468
------------------ -------------------
Other assets:
FCC license 83,368 83,368
Debt issue costs, net 20,708 23,053
Deposits and other 17,797 8,909
------------------ -------------------
Total other assets 121,873 115,330
------------------ -------------------
Total assets $ 1,348,102 $ 1,206,612
================== ===================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 40,430 $ 30,454
Satellite construction and launch vehicles payable 7,069 19,275
Short-term notes payable - 114,075
------------------ -------------------
Total current liabilities 47,499 163,804
Long-term notes payable and accrued interest 463,203 488,835
Deferred satellite payments and accrued interest 59,384 55,140
Deferred income taxes 2,237 2,237
------------------ -------------------
Total liabilities 572,323 710,016
------------------ -------------------
Commitments and contingencies:
10 1/2% Series C Convertible Preferred Stock, no par value: 2,025,000 shares
authorized, none and 1,248,776 shares issued and outstanding at September
30, 2000 and December 31, 1999, respectively (liquidation preferences of
$0 and $124,878), at net carrying value including accrued dividends - 149,285
9.2% Series A Junior Cumulative Convertible Preferred Stock, $.001 par value:
4,300,000 shares authorized, 1,461,270 shares issued and outstanding at
September 30, 2000 and December 31, 1999 (liquidation preference of
$146,127), at net carrying value including accrued dividends 158,864 148,894
9.2% Series B Junior Cumulative Convertible Preferred Stock, $.001 par value:
2,100,000 shares authorized, 655,406 shares issued and outstanding at
September 30, 2000 and December 31, 1999 (liquidation preference of
$65,541), at net carrying value including accrued dividends 68,875 64,238
9.2% Series D Junior Cumulative Convertible Preferred Stock, $.001 par value:
10,700,000 shares authorized, 2,000,000 shares issued and outstanding at
September 30, 2000 (liquidation preference of $200,000), at net carrying
value including accrued dividends 205,154 -
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,
42,095,041 and 28,721,041 shares issued and outstanding at
September 30, 2000 and December 31, 1999, respectively 42 29
Additional paid-in capital 568,108 268,641
Deficit accumulated during the development stage (225,264) (134,491)
----------------- -------------------
Total stockholders' equity 342,886 134,179
----------------- -------------------
Total liabilities and stockholders' equity $ 1,348,102 $ 1,206,612
================= ===================
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 Nine Months the period
Ended Sept. 30, May 17, 1990
------------------------------- (date of inception)
2000 1999 to Sept. 30, 2000
------------- ------------- --------------------
Cash flows from development stage activities:
Net loss $ (90,773) $ (36,168) $ (225,264)
Adjustments to reconcile net loss to net cash provided by
(used in) development stage activities:
Depreciation expense 1,589 527 2,753
Unrealized (gain) loss on marketable securities 1,348 126 (2,534)
Loss on disposal of assets 249 10 364
Special charges - - 25,557
Accretion of notes payable charged as interest expense 57,557 33,436 141,622
Compensation expense in connection with
issuance of Common Stock and stock options 5,744 695 10,286
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 (7,183) (439) (7,924)
Due to related party - - 351
Other assets (9,503) (4,062) (15,559)
Accounts payable and accrued expenses (18,429) 14,864 (8,858)
Deferred taxes - - 2,237
------------ ---------- -------------
Net cash provided by (used in) development stage activities (46,746) 8,989 (62,538)
------------ ---------- -------------
Cash flows from investing activities:
Sales (purchases) of marketable securities and restricted
investments, net 99,830 (191,386) (281,539)
Purchase of FCC license - - (83,368)
Payments for construction of satellites and launch vehicles (289,070) (189,044) (811,597)
Other capital expenditures (23,878) (31,228) (76,911)
Acquisition of Sky-Highway Radio Corp. - - (2,000)
------------ ---------- -------------
Net cash used in investing activities (213,118) (411,658) (1,255,415)
------------ ---------- -------------
Cash flows from financing activities:
Proceeds from issuance of notes payable 1,882 159,657 253,144
Proceeds from issuance of Common Stock, net 100,180 67,994 361,960
Proceeds from issuance of preferred stock, net 192,450 - 505,418
Proceeds from exercise of stock options and warrants 8,314 785 14,897
Proceeds from issuance of promissory notes
and units, net - 190,000 306,535
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 186,869 418,436 1,326,767
----------- ----------- ------------
Net increase (decrease) in cash and cash equivalents (72,995) 15,767 8,814
Cash and cash equivalents at the beginning of period 81,809 204,753 -
----------- ----------- -----------
Cash and cash equivalents at the end of period $ 8,814 $ 220,520 $ 8,814
=========== =========== ===========
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)
GENERAL
The accompanying consolidated financial statements and the notes
thereto do not include all of the information and disclosures normally included
in financial statements prepared in accordance with generally accepted
accounting principles. In the opinion of management, all adjustments (consisting
only of normal, recurring adjustments) considered necessary to fairly state our
consolidated financial position and consolidated results of operations have been
included. These financial statements should be read in connection with our
consolidated financial statements and the notes thereto for the fiscal year
ended December 31, 1999 included in our Annual Report on Form 10-K as filed with
the Securities and Exchange Commission.
NET LOSS PER SHARE
Basic loss per share is based on the weighted average number of
outstanding shares of our Common Stock. Diluted loss per share adjusts the
weighted average for the potential dilution that could occur if common stock
equivalents (i.e. convertible stock, convertible debt, warrants and stock
options) were exercised or converted into Common Stock. As of September 30, 2000
and 1999, approximately 19,808,000 and 19,842,000 common stock equivalents were
outstanding, respectively, and were excluded from the calculation of diluted
loss per share, as they were antidilutive.
MARKETABLE SECURITIES
Marketable securities consist of fixed income securities and are stated
at market value. Marketable securities are defined as trading securities under
the provision of SFAS No. 115, "Accounting for Certain Investments in Debt and
Equity Securities" ("SFAS No. 115"), and unrealized holding gains and losses are
reflected in earnings. Unrealized holding gains were $2,533 and $3,882 at
September 30, 2000 and December 31, 1999, respectively.
RESTRICTED INVESTMENTS
Restricted investments consist of fixed income securities and are
stated at amortized cost plus accrued interest. Restricted investments are
defined as held-to-maturity securities under the provision of SFAS No. 115 and
unrealized holding gains and losses are not reflected in earnings. Unrealized
holding losses were $345 and $716 at September 30, 2000 and December 31, 1999,
respectively. The securities included in restricted investments are restricted
to provide for interest payments due through May 15, 2002 on our 14 1/2% Senior
Secured Notes due 2009.
PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost and include interest on
funds borrowed to finance construction. Capitalized interest was $125,428 and
$72,810 at September 30, 2000 and December 31, 1999, respectively.
4
SIRIUS SATELLITE RADIO INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(DOLLAR AMOUNTS IN THOUSANDS, UNLESS OTHERWISE STATED)
(UNAUDITED)
SHORT-TERM NOTES PAYABLE
We entered into a credit agreement with Bank of America and other
lenders in July 1998 under which Bank of America and other lenders provided us a
$115,000 term loan. The proceeds of this facility were used to fund progress
payments for the purchase of launch services and to pay interest, fees and other
related expenses. On February 29, 2000, we repaid these loans and cancelled the
related credit agreement.
DEFERRED SATELLITE PAYMENTS
Under an amended and restated contract (the "Loral Satellite Contract")
with Space Systems/Loral, Inc. ("Loral"), Loral has deferred certain amounts due
under the Loral Satellite Contract. The amounts deferred 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 any milestone under the Loral Satellite Contract is delayed
beyond the date set forth in the Loral Satellite Contract. On November 1, 2000,
we announced that our fourth, ground spare, satellite is expected to be
delivered to ground storage in August 2001. This satellite 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 April 2003, at
the earliest. We have the right to prepay these deferred payments, together with
accrued interest, without penalty.
ENGINEERING DESIGN AND DEVELOPMENT COSTS
We have entered into an agreement with Lucent Technologies, Inc.
("Lucent") pursuant to which Lucent has agreed to use commercially reasonable
efforts to deliver integrated circuits ("chip sets") which will be used in
consumer electronic devices 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, Kenwood Corporation,
Matsushita Communication Industrial Corporation of USA, Mitsubishi Electric
Automotive America, Inc., Pioneer Corporation, Recoton Corporation, Sanyo
Electronic Co. Ltd., Visteon Automotive Systems and other contract 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 $12,354 and $5,831 for the three month periods ended September
30, 2000 and September 30, 1999, respectively, and $63,475 for the period May
17, 1990 (date of inception) to September 30, 2000.
RECLASSIFICATIONS
Certain amounts in the prior period's financial statements have been
reclassified to conform to the current period presentation.
5
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 expectations, beliefs, plans, objectives, assumptions, future events
or performance are not historical facts and may be "forward-looking" within the
meaning of the Private Securities Litigation Reform Act of 1995. Such 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." Accordingly, these
statements involve estimates, assumptions and uncertainties that could cause our
actual results to differ materially from those expressed in the forward-looking
statements. 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, 1999 (the "1999 Form 10-K"), and particularly the
risk factors set forth under the caption "Business--Risk Factors" in Part I of
the 1999 Form 10-K. Among the significant factors that have a direct bearing on
our results of operations are:
o unavailability of radios and our dependence upon third parties to develop,
manufacture and distribute radios;
o loss or impairment of one or more of our satellites due to operational
failures;
o unsuccessful launch or deployment of our third satellite;
o delays in constructing our fourth, ground spare, satellite;
o delays in implementing our business plan;
o unproven market for our service and unproven applications of technology;
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. Further, 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. New factors emerge from time to
time, and it is not possible for us to predict which will arise. In addition, we
cannot assess the impact of each such factor on our business or the extent to
which any factor, or combination of factors, may cause actual results to differ
materially from those contained in any forward-looking statements.
6
OVERVIEW
Sirius Satellite Radio Inc. ("Sirius") was organized in May 1990 and is
in its development stage. Our principal activities to date have included
developing our technology, obtaining regulatory approval for our service,
launching two satellites, constructing one additional satellite and commencing
construction of a fourth satellite, constructing our broadcast facility,
acquiring content for our programming, constructing our ground repeater network,
arranging for the development of radios, strategic planning, market research,
recruiting our management team and securing financing for capital expenditures
and working capital. We will require funds for working capital, interest on
borrowings, acquisition of programming, financing costs and operating expenses
until some time after we commence operations. We cannot assure you that we will
ever commence operations, attain any particular level of revenues or achieve
profitability.
We plan to begin broadcasting in January. We expect to have a limited
quantity of radios available during the first quarter of 2001. These radios will
be distributed through select vehicle manufacturers and radio manufacturers as
part of a comprehensive quality assurance program. The technical portion of this
program will include end to end testing and integration of our studio,
broadcast, transaction management and customer service systems. The content
portion of this program will refine Sirius' programming based on feedback
obtained from users of these initial radios.
Radios will not be made widely available until our quality assurance
program has been completed and we can ensure a high quality consumer service.
Subscriptions to Sirius from the sale of radios in the autosound aftermarket are
expected to increase in each quarter of 2001, with a majority of such
subscriptions occurring in the fourth quarter, corresponding to the peak annual
sales period for consumer electronics products. We expect factory installation
of radios in new vehicles to occur on a limited basis in the first half of 2001,
with volume increasing as manufacturers complete their qualification of radios
and new car models are introduced in the third quarter of 2001.
Upon commencing operations, we expect our primary source of revenues to
be subscription fees. We anticipate that our subscription fee will be $9.95 per
month, with a one time activation fee per subscriber. We also expect our
subscription to be included with the sale or lease of certain new vehicles.
In addition, we expect to derive revenues from directly selling or bartering
advertising on our non-music channels.
We expect that the operating expenses associated with our service will
consist primarily of marketing and sales costs, cost to acquire programming,
expenses of maintaining our satellite and 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 November 10, 2000, we had 152 employees. By commencement of operations, we
expect to have approximately 300 employees.
Our first and second satellites were launched on June 30, 2000 and
September 5, 2000, respectively. Loral delivered us title to our first and
second satellites on July 31, 2000 and September 29, 2000, respectively,
following the completion of in-orbit testing. We expect to launch our third
satellite shortly and we expect our fourth satellite to be delivered to
ground storage in August 2001.
7
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED WITH THREE MONTHS ENDED
SEPTEMBER 30, 1999
We had net losses of $31,170 and $13,123 for the three months ended
September 30, 2000 and 1999, respectively. Our total operating expenses were
$31,819 and $12,932 for the three months ended September 30, 2000 and 1999,
respectively.
Engineering design and development costs were $17,476 and $7,188 for
the three months ended September 30, 2000 and 1999, respectively. These
engineering costs represented primarily payments to Lucent (in the 1999 quarter)
and to Lucent and other radio development and contract manufacturing partners
(in the 2000 quarter). The increase in costs in the 2000 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 September 30, 2000 to $14,343 from $5,744 for the three months ended
September 30, 1999. General and administrative expenses increased principally
due to the growth of our management team and workforce, expenses in connection
with stock options granted to non-employees and the purchase of in-orbit
insurance for our first and second satellites. The major components of general
and administrative expenses in the 2000 quarter were salaries and employment
related costs (40%), marketing costs (17%) and rent and occupancy costs (12%),
while in the 1999 quarter the major components were salaries and employment
related costs (29%), marketing costs (12%) and rent and occupancy costs (22%).
The remaining portion of general and administrative expenses (31% in the 2000
quarter and 37% in the 1999 quarter) 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 the 2000 or 1999 quarters.
The increase in interest and investment income to $6,265 for the three
months ended September 30, 2000 from $3,809 for the three months ended September
30, 1999 was the result of higher average balances of cash, marketable
securities and restricted investments during the 2000 quarter. The higher
average balances of cash, marketable securities and restricted investments
during the 2000 quarter were due to the investment throughout the 2000 period of
proceeds from financing activities in 2000 and the fourth quarter of 1999,
including the issuance of our 8 3/4% Convertible Subordinated Notes due 2009,
our 9.2% Series B Junior Cumulative Convertible Preferred Stock, our 9.2% Series
D Junior Cumulative Convertible Preferred Stock and 5,740,322 shares of our
Common Stock.
Interest expense was $5,616 for the three months ended September 30,
2000 and $4,000 for the three months ended September 30, 1999, net of
capitalized interest of $14,919 and $16,393, respectively. Gross interest
expense increased by $142 and capitalized interest decreased by $1,474 during
the period. We capitalized less interest during the 2000 quarter due to the
successful launches of our first satellite on June 30, 2000 and our second
satellite on September 5, 2000.
NINE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED WITH NINE MONTHS
ENDED SEPTEMBER 30, 1999
We had net losses of $90,773 and $36,168 for the nine months ended
September 30, 2000 and 1999, respectively. Our total operating expenses were
$87,463 and $38,694 for the nine months ended September 30, 2000 and 1999,
respectively.
8
Engineering design and development costs were $51,630 and $21,532 for
the nine months ended September 30, 2000 and 1999, respectively. These
engineering costs represented primarily payments to Lucent (in the 1999 period)
and to Lucent and other radio development and contract manufacturing partners
(in the 2000 period). The increase in costs in the 2000 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 nine months ended
September 30, 2000 to $35,833 from $17,162 for the nine months ended September
30, 1999. General and administrative expenses increased due to the growth of our
management team and workforce, expenses in connection with stock options
granted to non-employees and the purchase of in-orbit insurance for our first
and second satellites. The major components of general and administrative
expenses in the 2000 period were salaries and employment related costs (44%) and
rent and occupancy costs (13%), while in the 1999 period the major components
were salaries and employment related costs (30%) and rent and occupancy costs
(24%). The remaining portion of general and administrative expenses (43% in the
2000 period and 46% in the 1999 period) consisted of other costs such as legal
and regulatory, insurance, marketing, consulting, travel, depreciation and
supplies, with only marketing expenses (13%) exceeding 10% of the total in the
2000 period and only legal and regulatory costs (13%) exceeding 10% of the total
in the 1999 period.
The increase in interest and investment income to $20,691 for the nine
months ended September 30, 2000 from $10,209 for the nine months ended September
30, 1999 was the result of higher average balances of cash, marketable
securities and restricted investments during the 2000 period. The higher average
balances of cash, marketable securities and restricted investments during the
2000 period were due to the investment throughout the 2000 period of proceeds
from financing activities in 1999 and 2000, including the issuance of our
14 1/2% Senior Secured Notes due 2009, our 8 3/4% Convertible Subordinated Notes
due 2009, our 9.2% Series B Junior Cumulative Convertible Preferred Stock, our
9.2% Series D Junior Cumulative Convertible Preferred Stock and 5,740,322 shares
of our Common Stock.
Interest expense was $24,001 for the nine months ended September 30,
2000 and $7,683 for the nine months ended September 30, 1999, net of capitalized
interest of $52,618 and $39,785, respectively. The increase in interest expense
for the 2000 period was related primarily to the induced conversion of a portion
of our 8 3/4% Convertible Subordinated Notes due 2009. Gross interest expense
increased by $29,151 greater than the corresponding increase in capitalized
interest of $12,833. In addition, gross interest expense and capitalized
interest for the 2000 period increased due to interest accruing on our 14 1/2%
Senior Secured Notes due 2009 issued in May 1999 and our 8 3/4% Convertible
Subordinated Notes due 2009 issued in September and October 1999, which were
outstanding throughout the 2000 period but during only a portion of the 1999
period.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 2000, we had cash, cash equivalents, marketable
securities and restricted investments totaling $293,309 and working capital of
$253,734 compared with cash, cash equivalents, marketable securities and
restricted investments totaling $467,073 and working capital of $304,010 at
December 31, 1999.
FUNDING REQUIREMENTS
We believe we can fund our planned operations, including the
construction of our broadcast system, into the fourth quarter of 2001 from our
existing working capital and the proceeds of the Lehman Term Loan Facility (as
defined in "Sources of Funding" below). We anticipate that we will require
approximately $75,000 beyond cash on hand and the proceeds of this facility to
fund operations during the balance of 2001, although this amount is subject to a
number of factors affecting our operations. In addition, we may require
additional funds until our revenues grow substantially.
9
We entered into the Loral Satellite Contract to build and launch the
satellites necessary to transmit our service. The Loral Satellite Contract
provides for Loral to construct, launch and deliver three satellites in-orbit
and checked-out, to construct for us a fourth satellite for use as a ground
spare and to provide satellite launch services. We are committed to make
aggregate payments of approximately $745,890 under the Loral Satellite Contract,
which includes $15,000 of long-lead time parts for a fifth satellite. As of
September 30, 2000, $644,514 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 made in installments that commenced in April 1997 and will
end in December 2003. Approximately half of the payments under the Loral
Satellite Contract are contingent upon Loral meeting specified milestones.
We also will require funds for working capital, interest on borrowings,
acquisition of programming, financing costs and operating expenses until some
time after we commence operations. We expect our interest expense will increase
significantly when compared to our 1999 interest expense as a result of the
issuance of our 14 1/2% Senior Secured Notes due 2009 in May 1999 and our 8 3/4%
Convertible Subordinated Notes due 2009 in September and October 1999,
respectively. A portion of the net proceeds of the issuance of our 14 1/2%
Senior Secured Notes due 2009 was used to purchase a portfolio of U.S.
government securities in an amount sufficient to pay interest on these notes
through May 15, 2002.
The amount and timing of our actual cash requirements will depend upon
numerous factors, including costs associated with the launch and deployment of
our third satellite, construction of our fourth, ground spare, satellite,
construction and deployment of our ground repeater network costs associated with
the design and development of chip sets and radios, the rate of growth of our
business after commencing service, costs of financing and the possibility of
unanticipated costs. We will require additional funds if there are delays, cost
overruns, unanticipated expenses, satellite losses or impairments, launch
failures, satellite system or launch services change orders or shortfalls in
estimated levels of operating cash flow.
SOURCES OF FUNDING
To date, we have funded our capital needs through the issuance of debt
and equity securities. As of September 30, 2000 we had received a total of
approximately $874,000 in equity capital as a result of the following
transactions: (1) the sale of shares of our Common Stock prior to the issuance
of our FCC license (net proceeds of approximately $22,000); (2) the sale of
5,400,000 shares of 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 5% Delayed Convertible Preferred Stock); (3) the sale of
4,955,488 shares of our Common Stock (net proceeds of approximately $71,000) in
1997; (4) 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; (5) 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; (6) 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; (7) the sale of 3,000,000
shares of our Common Stock in an underwritten public offering (net proceeds of
approximately $68,000) in September 1999, and an additional 450,000 shares of
our Common Stock in connection with the exercise of the underwriters'
over-allotment option (net proceeds of approximately $10,000) in October 1999;
(8) the sale of 2,000,000 shares of our 9.2% Series D Junior Cumulative
Convertible Preferred Stock to certain affiliates of The Blackstone Group, L.P.
(net proceeds of approximately $192,000) in January 2000; and (9) the sale of
2,290,322 shares of our Common Stock to DaimlerChrysler Corporation (net
proceeds of approximately $100,000) in February 2000.
10
In September 1999, we issued $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 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 this offering in connection
with their over-allotment option (net proceeds of approximately $18,000). In May
1999, we received net proceeds of approximately $190,000 from the issuance of
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 3.947 shares
of our Common Stock (as of September 30, 2000). The warrants are exercisable
through May 15, 2009 at an exercise price of $26.45 per share (as of September
30, 2000). We invested approximately $79,300 of these net proceeds in a
portfolio of U.S. government securities, which we pledged as security for
payment in full of interest on the 14 1/2% Senior Secured Notes due 2009 through
May 15, 2002. In November 1997, we received net proceeds of $116,000 from the
issuance of 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. 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. 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 and are secured by a pledge of the
stock of Satellite CD Radio Inc., our subsidiary that holds our FCC license. As
of September 30, 2000, we had acquired $62,914 of our 8 3/4% Convertible
Subordinated Notes due 2009 in exchange for shares of our Common Stock.
In July 1998, we entered into a term loan agreement with a group of
financial institutions pursuant to which these lenders provided us $115,000 of
term loans. The proceeds of these loans were used to fund a portion of the
progress payments required to be made by us under the Loral Satellite Contract
for the purchase of launch services and to pay interest, fees and other expenses
related to these loans. On February 29, 2000, we repaid these loans and
cancelled the related credit agreement.
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 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 any milestone under the
Loral Satellite Contract is delayed beyond the date set forth in the Loral
Satellite Contract. On November 1, 2000, we announced that our fourth, ground
spare, satellite is expected to be delivered to ground storage in August 2001.
This satellite 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 April 2003, at the earliest. As collateral security for these deferred
payments, we have granted Loral a security interest in our ground repeater
network. If there is a satellite or launch failure, we will be required to pay
Loral the deferred amount related to the affected satellite no later than 120
days after the date of the failure.
11
In June 2000, we entered into an agreement with Lehman Commercial Paper
Inc. ("Lehman") and Lehman Brothers Inc. pursuant to which Lehman agreed to
provide a term loan facility (the "Lehman Term Loan Facility") for us in the
aggregate principal amount of $150,000. The loans under the Lehman Term Loan
Facility will be made available to us upon the demonstration of our broadcast
system and upon satisfaction of certain customary conditions, and the proceeds
will be used for working capital, capital expenditures and general corporate
purposes. In connection with the Lehman Term Loan Facility, we placed into
escrow, for the benefit of Lehman, 1,050,000 warrants, each to purchase one
share of our Common Stock. The first 525,000 of these warrants (the "First
Tranche Warrants") have an exercise price of $44.46 per share and the remaining
525,000 warrants (the "Second Tranche Warrants") have an exercise price of
$54.30 per share . We expect these warrants to be released from escrow and
become exercisable by Lehman when the loans under the Lehman Term Loan Facility
are made available to us. If we terminate the Lehman Term Loan Facility on or
prior to November 30, 2000, the First Tranche Warrants and one third of the
Second Tranche Warrants will be released from escrow and become exercisable by
Lehman.
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.
Shares of our 9.2% Series A Junior Cumulative Convertible Preferred Stock and
9.2% Series B Junior Cumulative Convertible Preferred Stock are callable by us
beginning November 15, 2001 at a price of 100% if the current market price, as
defined in the Certificate 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, will be callable in all events beginning November 15,
2003 at a price of 100% and must be redeemed by us on November 15, 2011.
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 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 are convertible into shares of our Common Stock at a price of $34.00 per
share. Shares of our 9.2% Series D Junior Cumulative Convertible Preferred Stock
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, will be callable
in all events beginning December 23, 2004 at a price of 100% and must be
redeemed by us on November 15, 2011. 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.
On March 3, 2000, we notified the holders of our 10 1/2% Series C
Convertible Preferred Stock and the holders of all outstanding warrants to
purchase shares of our 10 1/2% Series C Convertible Preferred Stock that on
April 12, 2000 we would redeem these securities. As of April 12, 2000, all of
the outstanding warrants to purchase shares of our 10 1/2% Series C Convertible
Preferred Stock had been exercised and all of the outstanding shares of 10 1/2%
Series C Convertible Preferred Stock (including those shares received upon the
exercise of such warrants) had been converted into shares of our Common Stock.
12
PART II
OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At Sirius' annual meeting of stockholders held on September 22,
2000, the persons whose names are set forth below were elected as directors. The
relevant voting information for each person is set forth opposite such person's
name:
Votes Cast
For Withheld
David Margolese .......................... 49,955,534 356,035
Robert D. Briskman ...................... 49,955,484 356,085
Lawrence F. Gilberti .................... 49,784,326 527,243
Joseph V. Vittoria ...................... 49,974,091 337,478
Ralph V. Whitworth ...................... 49,784,224 527,345
In addition to the election of directors, the appointment of Arthur
Andersen LLP as our independent auditors for the fiscal year ending December 31,
2000 was ratified by a vote of 49,896,056 shares in favor, 402,885 shares
against and 12,628 shares abstaining.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
See Exhibit Index attached hereto.
(b) Reports on Form 8-K:
None.
13
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)
November 14, 2000
14
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 (filed
herewith).
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 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).
4.18 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, 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 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).
4.24 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).
4.25 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
4
EXHIBIT DESCRIPTION
(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 December 31, 1999, between the
Company and Robert D. Briskman (incorporated by reference to Exhibit
10.4 to the 1999 Form 10-K).
*10.5 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).
*10.6 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).
*10.7 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).
10.8 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
5
EXHIBIT DESCRIPTION
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).
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
6
EXHIBIT DESCRIPTION
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).
+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).
+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).
27.1 Financial Data Schedule (filed herewith).
* This document has been identified as a management contract or compensatory
plan or arrangement.
+ Portions of these exhibits have been omitted pursuant to Applications for
Confidential treatment filed by the Company with the Securities and Exchange
Commission.
7
STATEMENT OF DIFFERENCES
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