Management s Discussion and Analysis of Financial Condition and Results of Operations

Management s Discussion and Analysis of Financial Condition and Results of Operations Management s discussion and analysis ( MD&A ) discusses the significant factors affecting the results of operations and financial position of Canadian Satellite Radio Holdings Inc. ( CSRH, we, us, our or the Company ). Under Canadian GAAP ( GAAP ) the June 21, 2011 business combination was accounted for as a reverse takeover whereby Sirius Canada Inc. ( Sirius Canada ) was deemed to be the acquirer of CSRH, using the purchase method of accounting. Therefore, the GAAP results for the Company are the results for Sirius Canada from December 1, 2010 to August 31, 2011 and the results for CSRH for the period of June 21, 2011 to August 2011. Sirius Canada s previous year-end of November 30 was changed to August 31 in order to align with the year-end of CSRH. The comparative results for the Company are those of Sirius Canada for the eleven months ended November 30, 2010. This MD&A should be read in conjunction with the audited consolidated financial statements and related notes thereto included in the Company s annual report for the period ended August 31, 2011. The financial statements of the Company are prepared in accordance with Canadian generally accepted accounting principles ( GAAP ) and are expressed in Canadian dollars, unless otherwise noted. In order to provide comparable information we have presented non-gaap unaudited pro forma information in the section entitled Unaudited Pro Forma Information as if the merger had occurred at September 1, 2009. We believe this information is relevant as it provides analysis of comparable periods to understand trends in our combined business. See section entitled Unaudited Pro Forma Information. Forward-Looking Disclaimer This discussion contains certain information that may constitute forward-looking statements within the meaning of securities laws. These statements relate to future events or future performance and reflect management s expectations and assumptions regarding the growth, results of operations, performance and business prospects and opportunities of the Company on a consolidated basis. In some cases, forward-looking statements can be identified by terminology such as may, would, could, will, should, expect, plan, intend, anticipate, believe, estimate, predict, potential, continue, seek or the negative of these terms or other similar expressions concerning matters that are not historical facts. In particular, statements regarding the Company s objectives, plans and goals, including future operating results, economic performance and subscriber recruitment efforts involve forward-looking statements. A number of factors could cause actual events, performance or results to differ materially from what is projected in the forward-looking statements. Although the forward-looking statements contained in this discussion are based on what management of the Company considers are reasonable assumptions based on information currently available to it, there can be no assurance that actual events, performance or results will be consistent with these forwardlooking statements, and management s assumptions may prove to be incorrect. Our financial projections are based on estimates regarding expected future costs and expected revenue, which are fully described in this MD&A. Among the significant factors that could cause our results to differ from those express in the forwardlooking statements are: Our competitive position versus other forms of audio and video entertainment A severe downturn in automobiles sales in Canada Our ability to manage customer attrition and average monthly subscription revenue per subscriber

Other than as required by applicable Canadian securities law, the Company does not update or revise any forward-looking statements to reflect new information, future events or otherwise. These forwardlooking statements are subject to risks and uncertainties that could cause actual results or events to differ materially from expectations. These include but are not limited to the risk factors included in this MD&A (including those listed under the heading Risk Factors ) in addition to the risks itemized in our Annual Information Form ( AIF ) for the fiscal year ended August 31, 2011. Readers are advised to review these risk factors for a detailed discussion of the risks and uncertainties affecting the Company s business. Readers should not place undue reliance on forward-looking statements. This MD&A contains the following sections: Forward-Looking Disclaimer... 1 Our Business and Strategy... 3 Use of Non-GAAP Financial Measures... 5 Unaudited Pro Forma Information... 7 Results of Operations Pro Forma Metrics... 10 Selected Historical Financial Information... 22 Liquidity and Capital Resources... 27 Off-Balance Sheet Arrangements... 35 Arrangements, Relationships and Transactions with Related Parties... 35 Critical Accounting Policies and Estimates... 37 Recent Accounting Pronouncements and Changes... 40 Future Accounting Pronouncements... 40 International Financial Reporting Standards ( IFRS )... 40 Certain Risk Factors... 44 Outstanding Share Data and Other Information... 47 OVERVIEW On June 21, 2011 Canadian Satellite Radio Holdings Inc., XM Canada and Sirius Canada completed the previously announced combination transaction and Sirius XM Canada was formed. By combining complementary strengths in the automotive and aftermarket businesses, we created a business currently with approximately 2.0 million subscribers, which ranks Sirius XM Canada as one of the largest subscriber based media and entertainment businesses in Canada. We believe that the newly created entity can grow subscribers and EBITDA faster than either XM Canada or Sirius Canada could have on their own. The Company expects to achieve this objective by: Quickly integrating the businesses to generate revenue growth Realizing costs synergies in excess of $20 million on an annual basis Leveraging the scalable business model and improved liquidity to maximize shareholder return Implementing best practices to accelerate subscriber and EBITDA growth Under Canadian GAAP the business combination was accounted as a reverse takeover whereby Sirius Canada is deemed to be the acquirer of CSRH, using the purchase method of accounting. Therefore, results for XM Canada are included in the consolidated financial statements beginning for the period June 21, 2011 to August 31, 2011. The results for the Company are the results for Sirius Canada from December 1, 2010 to August 31, 2011. For informational purposes, we have included unaudited non- GAAP pro forma results in this MD&A, which present the hypothetical performance of the business as if the combination transaction was completed on September 1, 2009. While the financial year-end of Sirius Canada prior to the merger was previously November 30 we have presented the pro forma financial 2

information as if the financial year of the Company was historically August 31. See the sections of this MD&A entitled Unaudited Pro Forma Information for more information. This MD&A has been prepared as of November 16, 2011 at which time 50,090,088 Class A Subordinate Voting shares and 218,498,526 Class B Voting shares are outstanding. Our Business and Strategy Our vision is to be the leading premium digital audio entertainment and information service provider in Canada. Our strategy is founded on the principles of acquiring subscribers in the most cost effective manner, retaining subscribers and enhancing the value proposition to our subscribers. Satellite Radio offers 120-130 channels, including commercial-free music as well as news, talk, sports and children s programming and over 12 Canadian channels designed and developed from studios in Toronto, Ontario, Montreal, Quebec and Vancouver, British Columbia. We continue to leverage our unique programming assets, such as our exclusive broadcasting agreement with the National Hockey League ( NHL ) and our NHL Home Ice channel, the Canadian Football League ( CFL ), and our agreement with the Canadian Broadcasting Corporation ( CBC ) in addition to exclusive agreements through Sirius XM Radio Inc. (SXM) for National Football League ( NFL ), Major League Baseball ( MLB ), National Basketball Association ( NBA ), Oprah, Martha Stewart, Howard Stern, Nascar, Professional Golfers Association of America ( PGA ) and more. Our target market in Canada includes more than 20 million registered vehicles on the road, and an estimated 1.57 million new vehicles forecasted to be sold in calendar year 2012. Currently all major automobile manufacturers in Canada have agreements with Sirius XM Canada for the installation of satellite radios. We are the leader in digital audio entertainment distribution and information delivered via satellite to new vehicles sold in Canada. The Satellite radio service is available as standard equipment or as a factory-installed option in more than 55% of new vehicles to be sold in model year 2012. Sirius XM Canada radios are available at leading retailers across Canada under Pioneer, Audiovox and other brand names at national consumer electronics retailers such as Best Buy, Future Shop, Canadian Tire, Wal-Mart Canada, Costco Canada, The Source and other national and regional retailers. Our primary source of revenue is subscription fees, with most of our customers subscribing on an annual, quarterly, or monthly basis. Discounts are offered for long-term, prepaid subscription plans, as well as discounts for multiple subscriptions on each platform. Other sources of revenue include music royalty fees, activation and other subscription-related fees, advertising revenues, the direct sale of satellite radios and accessories, and other ancillary services such data and weather services. In certain instances, automakers include a subscription to our radio services in the sale or lease of their vehicles. The length of these prepaid subscriptions varies from three to twelve months. In certain instances we also receive subscription payments from automakers in advance of our service being activated. We also reimburse various automakers for certain costs associated with the installment of satellite radios in their vehicles. The Company s goal is to accelerate EBITDA growth by maximizing our revenues primarily through subscriptions, advertising and other ancillary opportunities as well as maintaining effective cost controls, managing subscriber acquisition costs and by creating a long-term customer base by offering quality service. We believe that a premium service will attract a premium customer. 3

Highlights for the Fiscal Year 2011 CORPORATE AND BUSINESS HIGHLIGHTS The combination transaction between Sirius Canada Inc. and Canadian Satellite Radio Holdings Inc. On June 21, 2011, Canadian Satellite Radio Holdings Inc. and Sirius Canada Inc. completed the combination transaction announced in November 2010. CSRH issued from treasury 25.2 million Class A Subordinate voting shares and 138.1 million Class B voting shares to the Shareholders of Sirius Canada Inc., representing approximately a 58% equity interest in CSRH (on a partially diluted basis) immediately following the transaction, with the CSRH shareholders retaining a 42% equity interest. Operating as Sirius XM Canada, the combined entity currently has approximately 2.0 million subscribers and forms one of the country s leading media and entertainment companies. The Company s stock continues to be traded on the Toronto Stock Exchange under the symbol XSR. The following table represents the current ownership structure of the Company as at November 16, 2011. Shareholder Class A Class B Equity Equity % Voting % CSRI Inc. 698,655* 80,390,124 27,495,363 22.4% 30.2% Sirius XM US 36,325,944 30,967,680 46,648,504 37.9% 25.1% Slaight - 53,570,361 17,856,787 14.5% 19.9% CBC - 53,570,361 17,856,787 14.5% 19.9% Others 13,065,489-13,065,489 10.6% 4.9% Total 50,090,088 218,498,526 122,922,930 100.0% 100.0% *Includes Class A subordinate voting shares owned or controlled directly or indirectly by John Bitove. In the table above, Class B voting shares are convertible at a rate of one third of the Class A subordinate voting shares. Total equity represents the economic equivalent shares after converting Class B voting shares to their Class A subordinate voting shares equivalent. 4

Use of Non-GAAP Financial Measures In addition to our results reported in accordance with Canadian GAAP, we use certain non-gaap financial indicators, including non- GAAP Pro Forma information and operating measures for internal planning purposes and as a basis for investors and analysts to evaluate and compare the periodic operating performances and value similar companies in our industry, although our metrics may not be comparable to similarly titled metrics of other companies. For the current reporting period, the Company conducted a metrics review and realignment exercise. Therefore, some metrics may not be comparable to metrics disclosed publicly by the company prior to the consummation of the merger. Provided below are the definitions of metrics. (a) Average Monthly Subscription Revenue Per Subscriber (ARPU): derived from the total of earned subscription revenue and the music royalty fee and activation fees, divided by the monthly weighted average number of self-paying subscribers and a portion of the Paid-Promotional Subscribers where consumers have already started to consume their promotional service. ARPU is a measure of operational performance and not a measure of financial performance under GAAP. We believe ARPU is a useful measure of our operating performance and is a significant basis used by management to measure the operating performance of our business. This non- GAAP measure, which uses certain revenue line items from our Consolidated Statement of Operations and Comprehensive Income, should be used in addition to, but not as a substitute for, the analysis provided in the Consolidated Statement of Operations and Comprehensive Income. ARPU may fluctuate based on promotions, changes in our subscription rates, as well as the adoption rate of annual and multi-year prepayment plans, multi-radio discount plans (such as the family plan), commercial plans and premium services. (b) Cost Per Gross Addition (CPGA): includes the amounts in SAC, as well as advertising and marketing, which includes advertising, media and other discretionary marketing expenses divided by the number of total gross additions excluding Non-Paid Promotional subscribers. CPGA costs do not include the costs of marketing staff. CPGA is a measure of operational performance and not a measure of financial performance under GAAP. We believe CPGA is a useful measure of our operating performance and is a significant basis used by management to measure the operating performance of our business. This non-gaap measure, which uses certain expense line items from our Consolidated Statement of Operations and Comprehensive Income, should be used in addition to, but not as a substitute for, the analysis provided in our financial statements. (c) Customer care and billing costs per Self-Paying Subscriber: is calculated by dividing the total customer care and billing costs by average self-paying subscribers for the period. (d) EBITDA: is defined as earnings before interest (including loss on debt), taxes, amortization, and foreign exchange gains and losses. (e) Adjusted EBITDA: is defined as earnings before merger, restructuring costs and write-downs as a result of merger, stock-based compensation, interest (including loss on debt), taxes, amortization, and foreign exchange gains and losses. (f) Free Cash Flow: is defined as cash provided before financing activities on the Company s Consolidated Statement of Cash Flows. (g) OEM: refers to original equipment manufacturer. OEM, as it relates to the Company s satellite radio business, includes automotive manufacturers with which the Company has a contractual agreement in place to factory install a satellite radio in the particular manufacturer s vehicles. 5

(h) Self-pay churn: is defined as Self-Pay Subscriber deactivations for the period divided by the average number of Self-Pay Subscribers for the period divided by the number of months in the period. (i) Subscribers: a. Self-Paying Subscribers: subscribers who are receiving and have paid or agreed to pay for our satellite radio service by credit card, prepaid card or invoice. b. Paid-Promotional Subscribers: Subscribers currently in a trial period and vehicles factory-activated with one of the Sirius XM Canada services, whereby automakers have agreed to pay for all or a portion of the trial period service. c. Non Paid Promotional Subscribers: subscribers currently in a trial period and vehicles factory-activated with one of the Sirius XM Canada services, whereby the Company has agreed to compensate certain automakers to install satellite radios and the automakers have agreed to promote the trial period service to the consumer. Automakers are not paying for any portion of the trial period service. (j) Subscriber Acquisition Costs (SAC): includes subsidies and distribution costs and net costs related to equipment sold directly to the consumer divided by total gross additions excluding the Non-Paid Promotional Subscribers for the period. SAC is a measure of operational performance and not a measure of financial performance under generally accepted accounting principles. Management believes SAC is a useful measure of the operating performance of the business. This non-gaap measure, which uses certain expense line items from our Consolidated Statement of Operations and Comprehensive Income, should be used in addition to, but not as a substitute for, the analysis provided in the Consolidated Statement of Operations and Comprehensive Income. In our financial statements, most of our Subscriber Acquisition Costs are captured in the marketing section. (k) Subscription Revenue: consists primarily of monthly subscription fees (including Music Royalty Fee) for our satellite radio service charged to consumers, commercial establishments and businesses that purchase or lease vehicles for use in their business and is recognized as the service is provided. Promotions and discounts are treated as a reduction to revenue over the term of the plan purchased by the Subscriber. Subscription revenue growth is predominantly driven by growth in our subscriber base but is also affected by fluctuations in the percentage of subscribers in our various discount plans, family plans as well as changes in our subscription rates. 6

Unaudited Pro Forma Information Our unaudited pro forma information: Was prepared as if the combination transaction with CSRH had occurred on September 1, 2009 and is for informational purposes only, and because of its nature, addresses a hypothetical situation and does not represent our actual GAAP results; Was based on periods that do not conform to the Company s GAAP fiscal periods, and is presented as if Sirius Canada had always had an August fiscal year-end; Was not prepared using the pro forma definition as defined in National Instrument 51-102; Contained adjustments based on current information as of the date of our management s discussion and analysis for the year-ended August 31, 2011; Was not adjusted to reflect any matters not directly attributable to the acquisition. No adjustment, therefore, was made for actions, which have or may be taken upon completion of the merger, such as any of our integration plans. Costs related to effecting the merger have not been excluded from the pro forma information. Excluded the impact of purchase price accounting adjustments and refinancing transactions. Unaudited Pro Forma Financial Information Highlights for the three months ended August 31, 2011 The following are highlights for the three months ended August 31, 2011 (compared to the three months ended August 31, 2010): Revenue increased by 13.4% to $61.4 million from $54.1 million; Adjusted EBITDA improved 149.0% to $11.1 million from $4.4 million (a difference of $6.6 million); Self-Paying Subscribers increased 14.6% to 1,392,800 from 1,214,900; Total Subscribers increased 14.5% to 1,983,100 from 1,731,700; SAC decreased 12.3% to $50 from $57. Unaudited Pro Forma Financial Information Highlights for the full-year ended August 31, 2011 The following are highlights for the full-year ended August 31, 2011 (compared to the full-year ended August 31, 2010): Revenue increased by 17.9% to $238.7 million from $202.5 million; Adjusted EBITDA improved 302.3% to $26.5 million from $6.6 million; SAC decreased 10.0% to $54 from $60; Self-Paying Subscribers increased 14.6% to 1,392,800 from 1,214,900; Total Subscribers increased 14.5% to 1,983,100 from 1,731,700. 7

Fourth quarter Full Year 2011 2010 2011 2010 REVENUE Subscription 59,692,313 52,470,290 231,638,968 195,529,941 Activation 812,121 932,250 3,439,111 4,080,401 Equipment sales 542,697 446,580 2,339,643 1,679,173 Advertising and Other Revenue 335,396 297,015 1,241,820 1,221,394 Total Revenues 61,382,527 54,146,135 238,659,542 202,510,909 OPERATING EXPENSES Cost of Revenue Revenue share and royalties 18,261,555 16,319,252 72,670,598 56,927,061 Customer care & billing operations 4,379,990 3,928,370 17,068,398 16,133,301 Cost of merchandise 797,216 826,373 3,818,708 3,416,378 Broadcast and operations 554,457 567,119 2,033,982 2,142,478 Programming and content 1,796,911 1,871,191 11,066,327 11,491,346 Total Cost of Revenue 25,790,129 23,512,305 106,658,013 90,110,564 Gain on reversal of Part II license fee (4,819,192) General and administrative 2,046,299 3,296,481 11,664,816 14,386,224 Information Technology 2,993,349 2,989,779 11,892,906 11,957,141 Merger & restructuring costs 3,847,638-12,321,472 (14,880) Loss on disposal of property & equipment - 72,703-456,377 Write-down of intangibles 4,235,953-4,235,953 - Stock based compensation 160,344 225,418 249,908 2,088,328 Marketing Support 2,129,698 2,058,228 8,454,497 8,239,020 Subsidies and distribution 11,403,594 11,981,700 46,786,352 46,713,780 Advertising and marketing 5,957,706 5,792,511 26,681,068 28,874,126 Total Marketing 19,490,998 19,832,439 81,921,917 83,826,926 Amortization 6,290,273 6,834,416 26,429,607 27,185,599 Total operating expenses 64,854,983 56,763,541 255,374,592 225,177,087 Operating (Loss) (3,472,456) (2,617,406) (16,715,050) (22,666,178) Revenue increased by 2.7% in the fourth quarter of 2011 compared to the third quarter of 2011 and grew by 13.4% compared to the fourth quarter of 2010. On a full-year basis, revenue increased 17.9% in the year ending August 31, 2011 compared to the year ending August 31, l 2010. The year-over-year and sequential quarter increases were driven by growth in our revenue generating subscribers offset by a reduction in ARPU. Activation fees, a component of revenue, decreased in the fourth quarter of 2011 as well as full year 2011 compared to comparative periods in the prior year due to a general reduction in the non-oem subscribers as a percentage of the total subscriber base. The Company expects the decline in 8

after-market subscribers relative to the total subscriber base to continue as the business is becoming more OEM-centric going forward. The following is a reconciliation of pro forma profit (loss) before the undernoted to pro forma Adjusted EBITDA YEAR ENDED AUGUST 31, In ($000 s) 2011 2010 Operating Gain (Loss) (16,715) (22,666) Add back non-adjusted Operating Profit (Loss) items included in loss Amortization 26,430 27,186 EBITDA 9,715 4,520 Merger and restructuring costs 12,321 (15) Stock-based compensation 250 2,088 Write-down of intangibles 4,236 - Adjusted EBITDA 26,522 6,593 The following is a summary of quarterly results for past fiscal quarters. FISCAL YEAR 2011 In ($000 s) Q1 Q2 Q3 Q4 Operating Gain (Loss) (4,382) (5,074) (3,787) (3,472) Add back non-adjusted Operating Profit (Loss) items included in loss Amortization 6,977 6,741 6,422 6,290 EBITDA 2,595 1,667 2,635 2,818 Merger and restructuring costs 2,476 3,025 2,972 3,848 Stock-based compensation 40 23 27 160 Write-down of intangibles - - - 4,236 Adjusted EBITDA 5,111 4,715 5,634 11,062 9

FISCAL YEAR 2010 In ($000 s) Q1 Q2 Q3 Q4 Operating (Loss) (598) (13,789) (5,662) (2,617) Add back non-adjusted Operating Profit (Loss) items included in loss Amortization 6,588 6,956 6,808 6,834 EBITDA 5,990 (6,833) 1,146 4,217 Merger and restructuring costs (11) (4) - - Stock-based compensation 745 571 547 225 Costs paid by parent company 66 67 (133) - Adjusted EBITDA 6,790 (6,199) 1,560 4,442 Results of Operations Pro Forma Metrics The following table is a summary of the key financial and operating metrics that the Company uses to help measure the success of operations. Please refer to the previous section Operating Definitions for an overview of the metrics noted below. Financial and Operating Metrics Fourth Quarter Ended Year Ended Aug 31, Aug 31, Aug 31, Aug 31, 2011 2010 2011 2010 Beginning Subscribers 1,902,500 1,633,100 1,731,700 1,424,300 Net Additions 80,600 98,600 251,400 307,400 Ending Subscribers 1,983,100 1,731,700 1,983,100 1,731,700 Self-Paying 1,392,800 1,214,900 1,392,800 1,214,900 Paid & non paid Promotional 590,300 516,800 590,300 516,800 Ending Subscribers 1,983,100 1,731,700 1,983,100 1,731,700 Self- Pay 64,300 52,700 177,900 170,700 Paid/Non Paid Net Additions 16,300 45,900 73,500 136,700 Total Net Additions 80,600 98,600 251,400 307,400 Self Pay Churn 1.66% 1.75% 1.91% 1.89% ARPU $11.63 $12.20 $11.96 $12.28 SAC $50 $57 $54 $60 CPGA $75 $84 $84 $96 10

Subscribers 1,983,100 1,731,700 516,800 590,300 1,214,900 1,392,800 Q4 2010 Q4 2011 Self Paying Paying & Non Paying Promotional As at August 31, 2011, we had total subscribers of 1,983,100, representing 1,392,800 of Self Paying Subscribers and 590,300 Paid Promotional Subscribers and Non Paid Promotional Subscribers. Self- Paying Subscribers increased 14.6% versus the fourth quarter of 2010, driven largely by growth in OEM net additions. OEM net additions increased during the year as the Company s penetration rate increased while the conversion rate declined marginally. Paid Promotional Subscribers and Non Paid Promotional Subscribers increased 14.2% versus the fourth quarter of 2010. ARPU $12.20 $11.63 $12.28 $11.96 Q4 2010 Q4 2011 FY 2010 FY 2011 11

ARPU was $11.63 and $12.20 for the fourth quarters of 2011 and 2010 respectively. ARPU decreased by 4.7% in the fourth quarter of 2011 compared to the fourth quarter of 2010. For fiscal 2011 ARPU decreased 2.6% to $11.96 from $12.28 in fiscal 2010. The decrease in ARPU is due primarily to the following reasons: (i) (ii) (iii) (iv) contractual changes with our OEM partners; an increase in automotive Self-Paying Subscribers which have a lower ARPU due to higher price discounts being offered to these subscribers; an increase in subscribers committing to multi-year plans as a result of promotional discounts; and revenue from customers on lifetime plans being fully amortized. ARPU is below the basic service price due to promotions offered to new OEM Self-Paying Subscribers, Paid Promotional Subscriptions by automakers, family plan subscribers and discounted multi-year plans that provide the Company with a significant working capital benefit. As the Company continues to grow the business it is currently anticipated that ARPU may fluctuate due to multi-year plans and promotional discounts offered to attract and retain its Self-Paying Subscriber base. The Company currently expects downward pressure on ARPU as the business becomes increasingly dependent on the automotive business but is proactively seeking ways to temper the impact. The Company plans to implement additional revenue generating initiatives such as the offering of the Best of programming which could positively impact ARPU. Revenue Revenue includes Subscription Revenue, activation fees, sale of merchandise through direct fulfillment channels, advertising revenue from Canadian-produced channels and certain other revenue. ($ millions) $202.5 $238.7 $54.1 $61.4 Q4 2010 Q4 2011 FY 2010 FY 2011 12

Fourth quarter: Revenue increased by $7.2 million, or 13.4%, to $61.4 million from $54.1 million for the fourth quarters of 2011 and 2010, respectively. The increase was attributable to the Company s growing subscriber base offset by a decrease in ARPU to $11.63 from $12.20 over the same period. Year-to-date: On a year-to-date basis, revenue increased by $36.1 million or 17.9% to $238.7 million in 2011 from $202.5 million in 2010. The increase in revenues is attributable to the Company s growing subscriber base partially offset by a decrease in ARPU to $11.96 in 2011 from $12.28 in 2010. Revenue also increased by approximately $0.7 million due to an increase in radios sold through the Company s online stores. Cost of Revenue Cost of revenue increased by $2.3 million to $25.8 million in the fourth quarter of 2011 from $23.5 million in the fourth quarter of 2010. On a year to date basis, cost of revenue increased by $16.5 million or 18.4% to $106.7 million in 2011 from $90.1 million in 2010. The reasons for the increase in cost of revenue are discussed below. Cost of revenue is comprised of the following: Revenue share & royalties This category includes Canadian Radio-television Telecommunications Commission ( CRTC ) fees, Canadian content development ( CCD ), tariff obligations to composers, artists, and copyright owners for public performances and reproduction of their works broadcast on the Company s satellite radio service, residual commissions paid to retail distributors and fees paid to SXM, including a monthly royalty based on a percentage of all subscriber revenue. Fourth quarter: Revenue share & royalties increased by $1.9 million or 11.9%, to $18.2 million from $16.3 million for the fourth quarters of 2011 and 2010, respectively. Revenue share & royalties increased in the fourth quarter of 2011 compared to the fourth quarter of 2010 due to (a) an increase in royalty rates paid by Sirius Canada to SXM from 5% to 10% in July 2010 and (b) higher effective revenue share paid to various automakers as the Company achieved certain thresholds during the current period as compared to the same period prior year. The resulting effect of the higher royalty fees were fully reflected in the current quarter while only partially reflected in the same quarter prior year. Year-to-date: On a year-to-date basis, revenue share & royalties increased by $15.7 million or 27.7% to $72.7 million in 2011 from $56.9 million in 2010 due to increased revenues and increased payments to an automotive partner resulting from higher overall effective royalty rate in the current year compared to the previous year and higher revenues year over year. During the year the Company also received the benefit of a withholding tax credit of $0.8 million. Customer care & billing operations This category consists primarily of personnel and related costs associated with the ongoing operations of call centres. Credit card payment processing fees are also included in these costs. The Company operates onshore and offshore customer support centers through third party vendors and the objective is to continue to find the optimum blend of onshore and offshore volume allocation in order to maximize cost efficiencies. The Company has reduced costs in this area based on a cost per subscriber basis and will continue to seek further cost reduction opportunities as we realize synergies for the legacy businesses (XM Canada and 13

Sirius Canada) across the entire customer care platform. A larger subscriber base presents additional opportunities to reduce billing costs and credit card fees. Fourth quarter: Customer care & billing operations costs increased 11.5% to $4.4 million from $3.9 million for the fourth quarters of 2011 and 2010. Customer care & billing operations costs are primarily driven by the volume derived from the Company s growing subscriber base. Year-to-date: On a year-to-date basis, customer care & billing operations costs, increased by $1.0 million or 5.8% to $17.1 million in 2011 from $16.1 million in 2010. The increase in customer care & billing operations costs is due to the increase in the subscriber base. Customer Care and Billing Costs per Self-Paying Subscriber Fourth quarter: Customer care & billing costs per Self-Paying Subscriber decreased in the three months ended August 31, 2011 as higher operating costs were more than offset by a higher subscriber base, increased efficiencies and an increase in off-shore allocation of call volume. Year-to-date: Customer care & billing costs per Self-Paying Subscriber decreased in the year ended August 31, 2011 as higher operating costs were more than offset by a higher subscriber base, increased efficiencies and an increase in off-shore call volume. $1.10 $1.07 $1.19 $1.10 Q4 2010 Q4 2011 FY 2010 FY 2011 Cost of merchandise The Company sells merchandise under normal business terms directly to employees, friends and family, existing subscribers who purchase additional radios, and to commercial accounts through our direct fulfillment channel including through our online store. Cost of merchandise consists primarily of the cost of radios and accessories and related fulfillment costs associated with the direct sale of this merchandise. Fourth quarter: Cost of merchandise remained flat at $0.8 million for the fourth quarters of 2011 and 2010, respectively. These costs are primarily driven by the volume and levels of discounts on radio sales, which are mostly affected by promotional programs and commercial 14

accounts. Although sales volume increased during the current period compared to the same period in the prior year, costs remained relatively flat due to a change in product mix in the current period compared to the fourth quarter of 2010. Year-to-date: Cost of merchandise increased by $0.4 million or 11.8% to $3.8 million in 2011 from $3.4 million in 2010 due to higher volume of radios sold in the current period compared to same period last year. Broadcast & operations Includes costs associated with operating our terrestrial repeater network, the management and maintenance of systems and facilities as well as information technology expense related to the Company s studios. Specifically, broadcast expenses include costs associated with the management and maintenance of the systems, software, hardware, production and performance studios used in the creation and distribution of Canadian-produced channels. Operations expenses include operating costs of facilities and terrestrial repeater network and information technology expenses related to the broadcast facilities. Fourth quarter: Broadcast & operations expenses remained flat at $0.6 million for the fourth quarters of 2011 and 2010, respectively. Broadcast and operations expenses may fluctuate from quarter to quarter depending on the timing of maintenance and repairs on the Company s broadcast repeaters. Year-to-date: On a year-to-date basis, broadcast and operations decreased by $0.1 million or 5.1% to $2.0 million from $2.1 million in fourth quarters of 2011 and 2010. Broadcast and operations expenses may fluctuate from quarter to quarter depending on the timing of maintenance and repairs on the Company s broadcast repeaters. Programming & content Includes the creative, production and licensing costs for live NHL programming associated with the Company s Canadian-produced channels, which includes third party content acquisition that are driven by programming initiatives. Programming & content also includes licensing costs paid to the CBC. The Company views programming & content as a cost of attracting and retaining subscribers. The NHL License Agreement was launched on XM Canada service in November 2005 and is amortized over the NHL season, which runs for a nine month period beginning in October of each year. Fourth quarter: Programming & content expenses decreased by $0.1 million or 4.0%, to $1.8 million in fourth quarter of 2011 from $1.9 million in same quarter of 2010. The decrease is related to lower costs associated with NHL programming as the Canadian dollar relative to the US dollar was stronger in the fourth quarter of 2011 compared to the fourth quarter of 2010 and lower compensation costs in the current period compared to the same period last year. Year-to-date: On a year-to-date basis, programming & content expenses decreased $0.4 million or 3.7%, to $11.1 million in 2011 from $11.5 million in 2010. The decrease in programming costs is a result of lower costs to satisfy NHL obligations compared to the same period last year as the Canadian dollar strengthened against the US dollar during 2011 compared to the same period in 2010. Programming and content expenses also decreased marginally due to renegotiation of contracts with third parties while enhancing our programming. 15

Marketing Expenses Marketing costs consist of the direct cost to acquire a subscriber, including subsidies to drive hardware price points and distribution commissions, as well as discretionary costs consisting of advertising, and brand development and promotion of our service. Marketing expenses decreased by $0.3 million or 1.7%, to $19.5 million from $19.8 million for the fourth quarters of 2011 and 2010, respectively. The decrease in marketing expenses is due primarily to lower spending on subsidies and distribution costs offset by higher spending on advertising and marketing costs. On a year-to-date basis, marketing expenses decreased by $1.9 million or 2.3% to $81.9 million from $83.8 million for 2011 and 2010, respectively. The decrease in marketing expenses is driven by lower spending on advertising and marketing. Please see below for further details on year-over-year changes. Marketing support Marketing support includes staffing directly associated with selling radio receivers through our distribution channels, converting OEM trial customers into Self-Paying Subscribers, retaining our customer base and marketing the Sirius and XM brands. Fourth quarter: Marketing support costs remained relatively flat at $2.1 million for the fourth quarters of 2011 and 2010, respectively. Inflationary increases were offset by lower headcount for the comparable periods. Year-to-date: On a year-to-date basis, marketing support costs increased by $0.3 million or 2.6% to $8.5 million in 2011 from $8.2 million in 2010 due primarily to inflationary increases in labor costs offset by lower headcount in the current period compared to the prior period. Subsidies & distribution These direct costs include the subsidization of radios, commissions paid with respect to the sale and activation of radios, chipset costs, warranty costs and certain promotional costs. Fourth quarter: Subsidies & distribution costs decreased by $0.6 million, or 4.8%, to $11.4 million from $12.0 million for the fourth quarters of 2011 and 2010, respectively. Subsidies & distribution expenses decreased primarily due to lower costs in the Aftermarket channel as a result of lower volume of radios sold resulting in lower subsidy and commission payments offset higher costs in the OEM channel. In the fourth quarter of 2010, XM Canada had booked a one-time charge of $0.7 million for payment to an automotive partner. No one-time charges have been booked in the current period. Year-to-date: On a year-to-date basis, subsidies & distribution costs increased slightly by $0.1 million, or 0.2% to $46.8 million in 2011 from $46.7 million in 2010. Subsidies & distribution expenses increased primarily due to higher costs in the OEM channel offset by lower costs in the Retail channel. Costs increased in the OEM channel due to higher commission and loyalty payments as a result of higher volume in the current period compared to the prior period. Costs decreased in the Aftermarket channel as a result of lower volume of radios sold resulting in lower subsidy and commission payments. In fiscal 2010, XM Canada had booked a one-time charge of $0.7 million for payment to an automotive partner. No one-time changes have been booked in the current year. 16

SAC $57 $50 $60 $54 Q4 2010 Q4 2011 FY 2010 FY 2011 Per Subscriber Acquisition Costs SAC was $50 and $57 for the fourth quarters of 2011 and 2010, respectively. SAC was $54 and $60 for the year ended August 31, 2011 and 2010 respectively. The decrease in SAC is mainly attributable to lower subsidies and distribution costs in the automotive channel due to contractual changes with our partners. SAC also decreased due to a mix shift between radios in the aftermarket channel. Advertising & marketing The Company achieves success in these areas through coordinated marketing campaigns that include retail advertising through various media, co-operative advertising with distribution partners, sponsorships, and ongoing market research. These costs fluctuate based on the timing of these activities. Fourth quarter: Advertising & marketing increased by $0.2 million or 2.9% to $6.0 million in the fourth quarter of 2011 from $5.8 million in the comparable quarter in 2010 primarily due to higher variable costs associated with communicating with OEM trial subscribers and marginally higher agency costs partially offset by a reduction in general advertising and brand marketing costs. Year-to-date: On a year-to-date basis, advertising & marketing decreased $2.2 million, or 7.6%, to $26.7 million in 2011 from $28.9 million in 2010 due to a reduction in general advertising and brand marketing partially offset by higher variable costs associated with communicating with OEM trial subscribers and a one-time charge of $0.7 million for costs based on contractual commitments with a third party service provider. 17

CPGA $96 $84 $75 $84 Q4 2010 Q4 2011 FY 2010 FY 2011 Cost Per Gross Addition CPGA was $75 and $84 for the fourth quarters of 2011 and 2010, respectively. On a full-year basis, CPGA decreased to $84 from $96. CPGA decreased year-over-year due to lower advertising and marketing costs combined with higher gross additions during the period. The Company currently expects CPGA on a full-year basis to continue to trend downwards as it seeks efficiencies in advertising and marketing and continues to generate annual growth in subscribers by increasing its penetration of vehicles equipped with satellite radios, improving its conversion rate and capitalizing on the pre-owned vehicle channel. CPGA is generally lower for subscribers gained through the pre-owned market as compared to subscribers gained through the new vehicle channel. Gain on reversal of Part II license fees Historically, the CRTC has levied two different types of fees from broadcast licenses. These are known as Part I and Part II fees. The Canadian Association of Broadcasters (CAB), on behalf of their members, had challenged in Court the validity of the Part II license fees. In December 2006, the Federal Court ruled that the Part II license fees were an illegal tax. The Federal Government appealed the Federal Court judgment and on April 28, 2008, the Federal Court of Appeal reversed the decision and found that the fees were a valid regulatory charge. On June 27, 2008, CAB filed an application for leave to appeal the Appeal Court decision to the Supreme Court of Canada. On December 18, 2008, the Supreme Court of Canada granted the CAB leave to appeal the Part II license fee case and on January 19, 2009, the CAB s notice of appeal was filed. The Supreme Court of Canada was scheduled to hear the matter on October 19, 2009. On October 7, 2009, the CAB announced that its Board of Directors, along with other fee-paying stakeholders, approved the terms of a settlement agreement with the Federal Government pertaining to the Part II license fee issue. The agreement waived fees due to the Federal Government, but not collected by the CRTC for fiscal 2007, 2008 and 2009. The Company is required to pay a fee after 2009 as a new Part II fee regime which was implemented with a fee capped on an industry-wide basis. The pro forma statement ending August 31, 2010, includes the reversal of accrued and unpaid Part II license fees in the amount of $4.8 million that were credited to the consolidated statement of operations and comprehensive income. 18

General & Administrative Expenses General & administrative General & administrative expenses primarily include compensation, as well as other expenses which include public company costs, office occupancy expenses and other corporate expenses. Fourth quarter: General & administrative expenses decreased by $1.3 million or 37.9% to $2.0 million in 2011 from $3.3 million in 2010. The main components of general & administrative expenses are the following: o o Compensation expenses: These costs remained flat at $1.8 million for the fourth quarters of 2011 and 2010. Other expenses: These costs, which include public company costs, professional fees and other general corporate expenses, decreased to $0.3 from $1.6 million partially due to reduction in professional fees for the fourth quarters of 2011 and 2010, respectively. Year-to-date: On a year-to-date basis, general & administrative expenses decreased $2.7 million or 18.9%, to $11.7 million in 2011 from $14.4 million in 2010. The main components of general & administrative expenses are the following: o Compensation expenses: These costs increased by approximately $0.3 million or 4.0% to $7.5 million in 2011 from $7.2 million year-over-year. o Other expenses: decreased by $3.0 million to $4.2 million in 2011 from $7.2 million in 2010. Other expenses decrease due to the following reasons: A decrease of approximately $0.6 million in capital tax compared to the same period last year. Capital tax has been phased out in Ontario therefore the Company did not incur an expense this year. A reduction in professional fees of approximately $0.7 million. Reduction in other corporate expenses of $1.7 million. Information Technology Information Technology expenses primarily includes costs related to our subscriber management systems, data processing, communications cost, broadcast infrastructure cost and people costs. Fourth quarter: Information technology expenses remained relatively flat at $3.0 million for the fourth quarters of 2011 and 2010, respectively. Year-to-date: Information Technology expenses decreased marginally by $0.1 million or 0.5% to $11.9 million in 2011 from $12.0 million in 2010. The Company will seek to realize savings in this area by streamlining communications and data processing costs and consolidating operating systems across a single platform. 19

Merger and Restructuring Costs - On a year-to-date basis, merger costs of $12.3 million relate to legal and professional fees, fees to review the proposed agreement and fees paid to members of the board of directors of CSRH related to a committee of independent directors established to review the transaction. Merger costs which include legal and financial advisory fees were approximately $7.7 million, and restructuring costs were approximately $4.6 million. Included in the restructuring costs are amounts totaling approximately $3.3 million which have been paid to the former Chief Executive Officer of XM Canada, the former Chief Financial Officer of Sirius Canada and to the Executive Chairman of CSRH. The Company expects to incur additional restructuring costs in fiscal 2012. Stock-based Compensation Stock-based compensation expenses are related to the issuance of stock options. Fourth quarter: Stock-based compensation expenses remained relatively flat at $0.2 million in 2011 and 2010. Year-to-date: Stock-based compensation expenses decreased by $1.8 million to $0.3 million in 2011 from $2.1 million due to the vesting of options previously granted and relatively few options being granted since December 2009. Adjusted EBITDA $26.5 $11.1 $4.4 $6.6 Q4 2010 Q4 2011 FY 2010 FY 2011 Adjusted EBITDA The Company intends to use EBITDA and its variants, as included in the Operating Definitions section, to gauge the performance of the business going forward. 20

Fourth quarter: Adjusted EBITDA improved by $6.6 million or 149.0% to $11.1 million from $4.4 million in the fourth quarters of 2011 and 2010, respectively. Adjusted EBITDA improved compared to the same period in the prior year primarily due to a $7.2 million revenue improvement, a $1.3 million decrease in general and administrative costs, lower marketing costs of $0.3 million offset by higher cost of revenue of $2.3 million. Year-to-date: Adjusted EBITDA improved by $19.9 million or 302.3% to $26.5 million in 2011 from $6.6 million compared to 2010. Adjusted EBITDA improved over the prior year due to a $36.1 million increase in revenue, a $1.9 million decrease in marketing costs and a $2.8 million reduction in support expenses (General & Administrative and Information Technology) offset by a $16.5 million increase in cost of revenue. 21

Selected Historical Financial Information The following selected financial information has been derived from our audited consolidated financial statements for the period ended August 31 2011. The previous financial year ends of Sirius Canada Inc. were November 30, 2010 and December 31, 2009; however, in conjunction with the acquisition the yearend was changed to August 31, 2011. The results for the Company therefore include the results for the prior period of Sirius Canada from January 1, 2010 to November 30, 2010 and for the current period, the results for Sirius Canada from December 1, 2010 to August 31, 2011 and the results for CSRH for the period June 21, 2011, the date of the closing of the combination transaction, to August 31, 2011. This information should be read in conjunction with our audited consolidated financial statements and related notes thereto. The fiscal 2011 results are not directly comparable to the 2010 results due to the inclusion of financial results from CSRH beginning with the date of acquisition and certain non-recurring items. Moreover, the most recent fiscal reporting period includes nine months of results for Sirius Canada while the prior reporting period includes eleven months of operations for Sirius Canada, hence, the two reporting periods cannot be compared in a meaningful way. For a qualitative assessment of reasons or factors that caused variances in results from period to period, management directs the reader to the pro forma discussion provided earlier, which is substantially applicable to the reported results. 22