Liberty Media Corporation 2014 Investor Day November 19, 2014
Forward-Looking Statements This presentation includes certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements about business strategies including investments in new and existing businesses and equity affiliates, market potential, new service and product launches, the proposed stock repurchases by SiriusXM, the continuation of our stock repurchase plans, and other matters that are not historical facts. These forward-looking statements involve many risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements, including, without limitation, possible changes in market acceptance of new products or services, competitive issues, regulatory matters affecting our businesses, continued access to capital on terms acceptable to Liberty Media, satisfaction of the conditions to our proposed offering of new convertible debt, satisfaction of the conditions to SiriusXM's repurchase of stock from us, the availability of acquisition opportunities, changes in law and government regulations that may impact the derivative instruments that hedge certain of our financial risks and market conditions conducive to stock repurchases. These forward-looking statements speak only as of the date of this presentation, and Liberty Media expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein to reflect any change in Liberty Media s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. Please refer to the publicly filed documents of Liberty Media, including the most recent Forms 10-Q and 10-K, for additional information about Liberty Media and about the risks and uncertainties related to Liberty Media s business which may affect the statements made in this presentation. 2
Agenda 11:45 12:30 Experience Liberty & Lunch 12:30 12:35 12:35 12:50 12:50 1:15 1:15 1:35 Welcome.. Liberty Media... SiriusXM.. Live Nation.. Courtnee Ulrich Greg Maffei & Chris Shean Jim Meyer Michael Rapino 1:35 1:40 1:40 2:05 2:05 2:45 Liberty Broadband... Charter. Q&A... Greg Maffei Tom Rutledge John Malone & Greg Maffei 3
Shake it Off Greg Maffei President & CEO 4
Milestones Since Last Meeting Increased ownership stakes in SiriusXM, Live Nation Entertainment and Charter Completed spin-off of Charter stake into Liberty Broadband Settled previously contracted SIRI share sale Monetized bulk of investment in Barnes & Noble Continued to move Braves forward On track with new Cobb County stadium Distributed non-voting C shares Upsized convertible note offering Oct 13 5
C Shares Create Strategic Flexibility Distributed non-voting C shares in July Trading close to parity with single-vote A shares Ample trading liquidity Flexibility to use C shares as an acquisition currency Completion of Liberty Broadband spin-off has narrowed investment focus and reduced discount to NAV $60 $55 $50 $45 $40 $35 Liberty Broadband Spin-off 1.0% 0.5% 0.0% -0.5% -1.0% -1.5% -2.0% -2.5% -3.0% -3.5% $30-4.0% LMCA LMCK Premium/Discount 6
SiriusXM Financial Results Highlights Revenue up 10% YTD due to: Expected 2014 SAAR of 16.4, up 6% from 2013 New car conversion rate of 42% Increased used car dealer network to 14,000 Leading to expected record 1.25m self-pay net new adds in 2014 Adjusted EBITDA up 29% YTD due to: Increased revenue Reduced SAC Fixed-cost leverage Aggressively returning capital through share repurchase Buybacks have increased Liberty ownership to 57.5% Authorization increased by $2b in July Repurchased nearly $2.1b YTD Continuing to optimize capital structure Issued $1.5b of 6% Notes due 2024 in May Roughly 0.6x of remaining leverage capacity up to stated target of 4.0x (1) Defined as Adjusted EBITDA/Revenue. For a reconciliation of GAAP Operating Income to Adjusted EBITDA, see Appendix: Schedule 2. 7 LTM Adj. EBITDA & % Margin (1) $1,500 $1,412 40% $1,166 35% $920 $1,000 $731 30% $626 25% $500 20% $- 15% 2010 2011 2012 2013 9/30/14 Subscribers 26.7 25.6 23.9 21.9 20.2 18.8 2009 2010 2011 2012 2013 9/30/14
SiriusXM Value Creation SiriusXM appeal remains clear Ease of use Exclusive content and commercial free music Valuable in-car real estate and OEM relationships Unique satellite and spectrum assets Subscription model provides consistency and enables financial leverage Revenue growth on fixed cost base allows margin expansion and FCF growth Opportunities Connected Car Critical developing market; leverage SIRI s valuable in-car real estate and OEM relationships into leadership position Agero acquisition now fully integrated; organic growth opportunity as penetration rate rises Streaming - important to address consumer demand outside the car, but unclear that companies like Pandora/Spotify have viable business model Many listeners largely habituated to free-of-charge, ad-driven consumption model (opposite of SIRI model) Exclusive content remains a key differentiator for SIRI vs. commodity music streaming services (significant defensive moat) Installed base of unsubscribed vehicles 8
Live Nation Record year strong growth in revenue, AOI and FCF On track to hit 2015 targets Renewed as technology-driven ecommerce company Ticketmaster.com a top ten global ecommerce site (425 million tickets processed) TM+ drives enhanced customer experience, including roll-out of dynamic ticketing, mobile and secondary market capabilities Technology upgrade enables data-centric operating and marketing strategy Digital monetization of content just beginning Streaming daily concert in partnership with Yahoo; strong response from advertisers Vice Media joint venture original content, multi-platform, ecommerce and ticketing Global opportunities leverage scale Concerts Ticketing Resale Advertising 9
LMC Composite price per share Outstanding Long Term Returns Composite LMC (1) Value per share up over 8-fold since issuance on 5/10/06 As of 11/14/2014 $800 $700 $600 $500 $400 $300 $200 $100 $- LMC Composite (1) See slide 12 for Composite LMC. Assumes DTV sold 1 year after issuance on 11/19/09 and reinvested in LMCA. Assumes STRZA sold 1 year after issuance on 1/11/13 and reinvested in LMCA. Adjusted for issuance of LMCK shares on 7/23/14 and LBRDA/K on 11/4/14. Includes performance of Liberty Broadband from completion of spin-off on 11/4/14. 10
Composite LMC It s Not About Confusing Our Investors, It s About Value 5/9/06: LCAPA ( LMC ) tracking stock issued 3/3/08: LMC issues LMDIA/B 4-for-1 11/19/09: DTV spun from LMDIA 1-for-1; remaining assets become LSTZA on a 0.10-to-1 basis 11/28/11: LMC re-combines with LSTZA on a 0.88129-for-1 basis 1/11/13: LMC spun from STRZA 1-for-1 7/23/14: LMCK shares issued 2-for-1 11/4/14: Liberty issues LBRDA/K for Broadband assets; 1-for-4 =(LMCA/K+LBRDA/K+STRZA) x 0.88129 x 0.10 x 4 As of 11/14/2014 LMCA $ 35.87 LSTZA tracker 50.02 DTV after 1 year: $42.15 x 4 168.60 Earnings on $168.60 DTV reinvested in LMCA 332.47 STRZA after 1 year: $30.41 30.41 STRZA reinvested in LMCA 0.81 LMCK x 2 70.08 LBRDA x 0.25 12.00 LBRDK x 0.25 x 2 23.94 Composite LMC $ 724.20 Compared to $79.00 on 5/10/06 Note: Assumes DTV sold 1 year after issuance on 11/19/09 and reinvested in LMCA. Assumes STRZA sold 1 year after issuance on 1/11/13 and reinvested in LMCA. Adjusted for issuance of LMCK shares on 7/23/14 and LBRDA/K on 11/4/14. Includes performance of Liberty Broadband from completion of spin-off on 11/4/14. 11
Combined price per share Recent Performance History Repeats LMCA/K + STRZA + LBRDA/K (1) $200 As of 11/14/2014 $175 $150 $125 $100 $75 $50 $25 STRZA LBRDK LBRDA LMCK LMCA $- (1) See slide 14 for value. Assumes STRZA sold 1 year after issuance on 1/11/13 and reinvested in LMCA. 12
LMCA/K + STRZA + LBRDA/K 1/11/13: LMC spun from STRZA 1-for-1 7/23/14: LMCK shares issued 2-for-1 11/4/14: Liberty issues LBRDA/K for Broadband assets; 1-for-4 As of 11/14/2014 LMCA $ 35.87 STRZA after 1 year: $30.41 30.41 STRZA reinvested in LMCA 0.81 LMCK x 2 70.08 LBRDA x 0.25 12.00 LBRDK x 0.25 x 2 23.94 $ 173.11 Compared to $124.03 on 1/11/13 Note: Assumes STRZA sold 1 year after issuance on 1/11/13 and reinvested in LMCA. 13
Chris Shean - CFO
NAV Discount on LMCA/K 45% 40% 35% 37% 38% LMC NAV discount % 30% 31% 25% 20% 26% 23% 23% 17% 17% SIRI merger proposal Liberty withdraws SIRI bid Liberty spins Broadband 15% 10% 5% 0% 12% 12% 10% 6% 4% 3% 11% 8% 6% 12% 10% 12% 10% Notes: Private asset values based on analyst estimates and excludes tax liabilities. 15
NAV Discount $ in billions, except share and per share amounts LMCA/B shares o/s 114.3 Net Asset Value (1) LMCK shares o/s 228.7 SIRI equity $ 11.1 A Share price $ 35.69 SIRI $ 11.1 K Share price $ 35.04 Market cap $ 12.1 Live Nation 1.4 Other Public assets 0.7 Private assets 1.0 Net debt (0.5) LMC NAV 13.7 Less: LMC market cap (12.1) LMCA/K Price Per share to NAV Missing Value $ 1.6 > $4 88.4% 1) NAV based on analyst consensus for private assets and excludes tax liabilities. Public values as of 11/14/14. 2) Net debt presented as of 9/30/14 and is pro forma for $300 million distribution from Liberty Broadband. See Schedule 1 for additional information. 16
Pro Forma Liberty Media Liquidity $5,000 $4,500 $4,000 $3,500 $4.3b $300 $750 Liberty Broadband Dividend (1) Margin Loan Revolver Capacity Easy Access $3,000 $522 Cash and Liquid Investments (2) $2,500 $2,000 $715 Other Public Holdings (3)(4) $1,500 $1,000 $2,009 High-Basis SIRI Shares (4) $500 $0 (1) Dividend received from the spin-off of Liberty Broadband; intended to be used for share repurchases within one year. (2) Excludes $104 million of cash and liquid investments held at SiriusXM as of 9/30/14 and pro forma for $47 million of cash held at TruePosition, which is now included in Liberty Broadband. Includes $296 million of short-term marketable securities with an original maturity greater than 90 days as of 9/30/14. (3) Time Warner Inc., Time Inc., Viacom and Barnes & Noble (on as converted basis) valued as of 11/14/14. Also includes $47 million of Other Equity Securities and $27 million of Other Debt Securities held as of 9/30/14. (4) Note that a straight sale would reduce net proceeds due to income taxes. Pro forma for Liberty Broadband spin-off completed on 11/04/14. 17
LMC Corporate Debt $ in millions $1,400 $1.3b $ in millions Margin loans & other debt $315 Margin loans $250 Other debt $65 $1,200 $1,000 $315 Margin Loans & Other Debt 1.375% convertible notes due 2023 (1) $1,000 $800 $600 $400 $1,000 LMC Convertible Bond $200 Note: Excludes SiriusXM corporate debt, which LMC consolidates for accounting purposes. (1) Face amount of cash convertible notes with no adjustment for fair market value. $- Debt 18
2014 Liberty Media Investor Meeting
DISCLAIMER ON FORWARD-LOOKING STATEMENTS The guidance contained herein is based upon a number of assumptions and estimates that, while considered reasonable by us when taken as a whole, is inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. In addition, the guidance is based upon specific assumptions with respect to future business conditions, some or all of which will change. The guidance, like any forecast, is necessarily speculative in nature and it can be expected that the assumptions upon which the guidance is based will not prove to be valid or will vary from actual results. Actual results will vary from the guidance and the variations may be material. Consequently, the guidance should not be regarded as a representation by us or any other person that the subscribers, revenue, adjusted EBITDA, and/or free cash flow will actually be achieved. You are cautioned not to place undue reliance on this information. This communication contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about future financial and operating results, our plans, objectives, expectations and intentions with respect to future operations, products and services; and other statements identified by words such as will likely result, are expected to, will continue, is anticipated, estimated, believe, intend, plan, projection, outlook or words of similar meaning. Such forward-looking statements are based upon the current beliefs and expectations of our management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are difficult to predict and generally beyond our control. Actual results may differ materially from the results anticipated in these forward-looking statements. 20
DISCLAIMER ON FORWARD-LOOKING STATEMENTS The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements: we face substantial competition and that competition is likely to increase over time; our ability to attract and retain subscribers in the future is uncertain; our business depends in large part upon the auto industry; general economic conditions can affect our business; failure of our satellites would significantly damage our business; interruption or failure of our information technology and communication systems could negatively impact our results and brand; if we fail to protect the security of personal information about our customers, we could be subject to costly government enforcement actions or private litigation and our reputation could suffer; royalties for music rights have increased and there can be no assurance they will not continue to increase in the future; the unfavorable outcome of pending or future litigation could have a material adverse effect; we may not realize the benefits of acquisitions or other strategic initiatives, including the acquisition of Agero s connected vehicle business; rapid technological and industry changes could adversely impact our services; failure of third parties to perform could adversely affect our business; changes in consumer protection laws and their enforcement could damage our business; failure to comply with FCC requirements could damage our business; other existing or future government laws and regulations could harm our business; we may from time to time modify our business plan, and these changes could adversely affect us and our financial condition; our indebtedness could adversely affect our operations and could limit our ability to react to changes in the economy or our industry; our broadcast studios, terrestrial repeater networks, satellite uplink facilities or other ground facilities could be damaged by natural catastrophes or terrorist activities; our principal stockholder has significant influence over our management and over actions requiring general stockholder approval and its interests may differ from the interests of other holders of Holdings common stock; we are a "controlled company" within the meaning of the NASDAQ listing rules and, as a result, qualifies for, and relies on, exemptions from certain corporate governance requirements; our business may be impaired by third-party intellectual property rights. Additional factors that could cause our results to differ materially from those described in the forward-looking statements can be found in Sirius XM s reports, including the most recent Form 10-Q and Form 10-K, filed with or furnished to the SEC and available at the SEC s Internet site (http://www.sec.gov). The information set forth herein speaks only as of the date hereof, and we disclaim any intention or obligation to update any forward looking statements as a result of developments occurring after the date of this communication. 21
SIRIUSXM AT A GLANCE Audio entertainment, traffic, weather, safety, security & convenience services to nearly 27 million subscribers Over 140 channels of curated, commercial free music, talk, news and sports content Satellite delivery provides seamless, nationwide coverage Available over the internet and via apps for Android & ios 22
UNIQUE VALUE DRIVERS Growing subscriber base and high variable margins drive predictable cash flows Factory installed in approximately 70% of new cars sold in U.S. More than $5 billion of gross NOLs Substantial capital return program under way 23
COMPELLING CONTENT 24
OUTSTANDING FUNDAMENTALS 9M13 9M14 % change Subscribers 25.6 mm 26.7 mm +5% Revenue $2,799 $3,090 +10% Adj. EBITDA $841 $1,086 +29% Margin 30.0% 35.1% +510 bp FCF $624 $825 +32% FCF/Share $0.097 $0.133 +37% KEY METRICS YTD 2014 ($ millions) 25
AMONG LARGEST IN SUBSCRIPTION MEDIA 18.8 20.2 21.9 23.9 25.6 ~27.1 2009 2010 2011 2012 2013 2014E 26
MULTI-YEAR REVENUE GROWTH ($ billions) $2.5 $2.8 $3.0 $3.4 $3.8 ~$4.15 2009 2010 2011 2012 2013 2014E 27
STRONG ADJ. EBITDA GROWTH ($ millions) $463 $626 $731 $920 $1,166 ~$1,425 2009 2010 2011 2012 2013 2014E 28
AMONG BEST MARGINS IN MEDIA 7% 10% 19% 25% 28% 33% 34% 2014E EBITDA Margins Reflects SiriusXM s 2014 Adjusted EBITDA and revenue guidance; Source for others: Thomson Reuters consensus 29
SIGNIFICANT FCF GROWTH ($ millions) $185 $210 $416 $709 $927 ~$1,120 2009 2010 2011 2012 2013 2014E 30
FREE CASH FLOW AS RATIO OF EBITDA 79% (7%) 23% 27% 33% 35% 38% 2014E FCF / EBITDA Reflects SiriusXM s FCF/Adjusted EBITDA guidance; Source for others: Thomson Reuters consensus 31
120 100 ENABLED VEHICLES GROWING (millions) 80 60 40 20 0 25 32 40 49 60 Source: Company estimates based on external industry estimates of 2014-19 automotive sales 32
GROWING SUBSEQUENT-OWNER ADDITIONS Subsequent-owner self-pay additions (in millions) 1.1 1.6 2.1 2012 2013 2014E Over 14,000 dealerships providing non-cpo trials Nearly 30% of self-pay additions now sourced from the subsequent owner market Expanding efforts to reach independent dealers & person-to-person sales 33
ENGAGING THE CUSTOMER Making it easier to do business with SiriusXM Service continuity during vehicle turnover Online account management Improving onboarding experience to drive engagement Expanded pricing options 34
BEST-IN-CLASS BUSINESS MODEL Long-term growth prospects Enabled vehicles 68m 120m estimated by 2019 Strong business model Unbeatable content + ease of use Steady fixed costs High variable margins Low capex and taxes Strong free cash flow enables capital returns 35
CAPITAL RETURN PROGRAM $6 billion common stock repurchase authorization YTD: 614 million shares repurchased for nearly $2.1 billion through Oct. 24 Since inception: 1.13 billion shares repurchased for $3.8 billion through Oct. 24 $2.2 billion remaining under stock repurchase authorization at Oct. 24 36
THE CONNECTED CAR IS HERE But broad implementation in new vehicles will take many years OEMs will pursue both tethered and embedded connectivity SiriusXM has a clear strategy to maintain a dominant position in the connected car 37
CONNECTED CAR OPPORTUNITIES SiriusXM is a leading provider of connected vehicle services Safety, security, & convenience features Rapid adoption through existing OEM relationships expected to drive penetration and organic growth Potential for new OEM relationships & global services 38
WHAT S NEXT? SATELLITE + IP Leveraging satellite and mobile internet to create an unmatched in-vehicle experience Enhanced consumer-facing features will provide on-demand content and customized music Expansion of usage data will enable improved personalization, customer service, and marketing The reason we are paid: winning value proposition and ease-of-use 39
November 2014
Q&A 79
Appendix 80
Select Fair Value LMC Pro Forma Balance Sheet Information Pro Forma for Liberty Broadband spin-off/dividend Cash, Public Holdings and Investments Initial ProForma adj Adjusted SiriusXM (1) : 3.16b shares x $3.53/share $ 11,141 - $ 11,141 Charter (2) : 27.75m shares x $152.10/share 4,222 (4,222) - Charter warrants (2) : 136k @ $51.28 strike 14 (14) - Charter warrants (2) : 947k @ $46.86 strike 100 (100) - Live Nation debt and equity (3) 1,423-1,423 Private assets, including Braves (4) 960-960 TruePosition (4) 298 (298) - Other public holdings (5) 1,047 (332) $715 Total Public Holdings and Investments $ 19,204 (4,965) $ 14,240 Cash and liquid investments (6) $ 569 $ (47) $ 522 Dividend from Liberty Broadband (7) - 300 300 Total Cash, Public Holdings and Investments $ 19,773 (4,712) $ 15,062 Debt Margin loans and other debt $ 315 - $ 315 LMC convertible bond 1,000-1,000 Call option liability 61 (61) - Total Debt + Call Option Liability $ 1,376 (61) $ 1,315 (1) Represents the fair value of Liberty Media's consolidated subsidiary, SiriusXM. The fair value is calculated based on Liberty s holdings multiplied by the trading price of the associated security as of 11/14/14. (2) Pro forma for Liberty Broadband spin-off completed on 11/04/14. Fair value based on trading price as of 11/14/14. (3) Represents the fair value of Liberty Media's investments in Live Nation debt and equity investments. The fair value of the equity investments is calculated based on Liberty s reported holdings of 53.7 million shares multiplied by the trading price as of 11/14/14 (plus $24 million in debt securities). Live Nation is accounted for as equity method investment on Liberty s balance sheet. (4) As per analyst estimates. (5) Fair value of Liberty Media s other public holdings calculated based on Liberty s holdings multiplied by the trading price of the associated security as of 11/14/14. Pro forma for Liberty Broadband spin-off completed on 11/04/14. (6) Excludes $104 million of cash and liquid investments held at SiriusXM as of 9/30/14. (7) Dividend received in conjunction with the spin-off of Liberty Broadband; intended to be used for share repurchases within one year. 81
Reconciling Schedules (Schedule 1) Liberty Media Cash and Debt Reconciliation Sept 30 Cash: 2014 Cash and liquid investments as presented (1) $ 522 Plus: Pro forma adjustment for TruePosition cash (2) 47 Plus: SiriusXM corporate cash (3) 104 Less: Short-term marketable securities (4) 296 Total Liberty Media Cash (GAAP) $ 377 Debt: Liberty 1.375% cash convertible notes due 2023 (5) $ 1,000 Margin Loans 250 Other Debt 65 Liberty Media Debt as Presented $ 1,315 Plus: SiriusXM senior notes (6) 4,150 Plus: SiriusXM exchangeable notes (6) 491 Plus: Other debt (SiriusXM) (6) 160 Total Liberty Media Debt $ 6,116 Unamortized premium and fair market value adjustment (42) Total Liberty Media Debt (GAAP) $ 6,074 (1) Cash and liquid investments as presented; pro forma for subsidiary cash at TruePosition that is now at Liberty Broadband and excluding cash held at SiriusXM, which Liberty Media consolidates for GAAP accounting. (2) Pro forma for Liberty Broadband spin-off completed on 11/04/14. Represents subsidiary cash held at TruePosition. (3) Cash held at SiriusXM, which Liberty Media consolidates for GAAP accounting. (4) Short-term marketable securities with an original maturity greater than 90 days as of 9/30/14. (5) Face amount of cash convertible notes with no adjustment for fair market value. (6) SiriusXM debt, which Liberty Media consolidates for GAAP accounting. Outstanding principal amount of senior notes and exchangeable notes is not adjusted for the premium resulting from purchase accounting. 82
SiriusXM Non-GAAP Financial Measures Preliminary Note This presentation includes references to Adjusted EBITDA, which is a non-gaap financial measure, for SiriusXM together with a reconciliation to operating income, as determined under GAAP. SiriusXM defines Adjusted EBITDA as follows: EBITDA is defined as operating income plus add-backs for depreciation and amortization; purchase price accounting adjustments; share-based payment expense; and restructuring, impairment and related costs. This measure is one of the primary non-gaap financial measures on which SiriusXM (i) evaluates the performance of its businesses, (ii) bases its internal budgets and (iii) compensates management. Adjusted EBITDA is a non-gaap financial performance measure that excludes (if applicable): (i) certain adjustments as a result of the purchase price accounting for the merger of Sirius and XM, (ii) depreciation and amortization and (iii) share-based payment expense. The purchase price accounting adjustments include: (i) the elimination of deferred revenue associated with the investment in XM Canada, (ii) recognition of deferred subscriber revenues not recognized in purchase price accounting, and (iii) elimination of the benefit of deferred credits on executory contracts, which are primarily attributable to third party arrangements with an OEM and programming providers. SiriusXM believes Adjusted EBITDA is a useful measure of the underlying trend of SiriusXM s operating performance, which provides useful information about its business apart from the costs associated with its physical plant, capital structure and purchase price accounting. SiriusXM believes investors find this non-gaap financial measure useful when analyzing its results and comparing its operating performance to the performance of other communications, entertainment and media companies. SiriusXM believes investors use current and projected Adjusted EBITDA to estimate its current and prospective enterprise value and to make investment decisions. Because SiriusXM funds and builds-out its satellite radio system through the periodic raising and expenditure of large amounts of capital, its results of operations reflect significant charges for depreciation expense. The exclusion of depreciation and amortization expense is useful given significant variation in depreciation and amortization expense that can result from the potential variations in estimated useful lives, all of which can vary widely across different industries or among companies within the same industry. SiriusXM also believes the exclusion of share-based payment expense is useful given the significant variation in expense that can result from changes in the fair value as determined using the Black-Scholes-Merton model which varies based on assumptions used for the expected life, expected stock price volatility and risk-free interest rates. Adjusted EBITDA has certain limitations in that it does not take into account the impact to SiriusXM s statements of comprehensive income of certain expenses, including share-based payment expense and certain purchase price accounting for the merger of Sirius and XM. SiriusXM endeavors to compensate for the limitations of the non-gaap measure presented by also providing the comparable GAAP measure with equal or greater prominence and descriptions of the reconciling items, including quantifying such items, to derive the non-gaap measure. Investors that wish to compare and evaluate SiriusXM s operating results after giving effect for these costs, should refer to net income as disclosed in its unaudited consolidated statements of comprehensive income. Since Adjusted EBITDA is a non-gaap financial performance measure, SiriusXM s calculation of Adjusted EBITDA may be susceptible to varying calculations; may not be comparable to other similarly titled measures of other companies; and should not be considered in isolation, as a substitute for, or superior to measures of financial performance prepared in accordance with GAAP. The reconciliation of SiriusXM s net income to Adjusted EBITDA is set forth on the next slide. 83
Reconciling Schedules (Schedule 2) SiriusXM EBITDA Reconciliation LTM FY 2010 FY 2011 FY 2012 FY 2013 9/30/2014 As reported income from operations $ 465 $ 676 $ 872 $ 1,045 $ 1,071 Purchase price accounting adjustments (240) (266) (282) (201) 4 Adjusted income from operations $ 225 $ 410 $ 590 $ 844 $ 1,075 As reported depreciation and amortization 274 268 266 253 260 As reported share-based payment expense 60 53 64 69 77 Adjustments to share-based payment expense (1) 3 - - - - As reported restructuring, impairments and related costs 64 - - - - Adjusted EBITDA $ 626 $ 731 $ 920 $ 1,166 $ 1,412 (1) Purchase price accounting adjustments associated with share-based payment expense. 84
Appendix: Reconciliation
RECONCILIATION FOR SIRIUSXM Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 FY2009 FY2010 FY 2011 FY 2012 FY 2013 As Reported Total Revenue 897,398 940,110 961,509 1,000,078 997,711 1,035,345 1,057,087 2,472,638 2,816,992 3,014,524 3,402,040 3,799,095 Purchase Price Accounting Adjustments 1,813 1,813 1,813 1,813 1,813 1,813 1,813 54,065 21,906 10,910 7,479 7,251 Adjusted Total Revenue 899,211 941,923 963,322 1,001,891 999,524 1,037,158 1,058,900 2,526,703 2,838,898 3,025,434 3,409,519 3,806,346 As Reported Total Operating Expenses 650,467 672,374 676,980 754,722 750,304 750,767 763,059 2,244,312 2,351,578 2,338,407 2,530,015 2,754,542 Purchase Price Accounting Adjustments 68,409 69,479 68,895 1,068 945 945 945 240,891 261,832 277,258 289,278 207,854 Adjusted Total Operating Expenses 718,876 741,853 745,875 755,790 751,249 751,712 764,004 2,485,203 2,613,410 2,615,665 2,819,293 2,962,396 As Reported Income from Operations 246,931 267,736 284,529 245,356 247,407 284,578 294,028 228,326 465,414 676,117 872,025 1,044,553 Purchase Price Accounting Adjustments (66,596) (67,666) (67,082) 745 868 868 868 (186,826) (239,926) (266,348) (281,799) (200,603) Adjusted Income from Operations 180,335 200,070 217,447 246,101 248,275 285,446 294,896 41,500 225,488 409,769 590,226 843,950 As Reported Depreciation and Amortization 67,018 67,415 58,533 60,348 68,267 67,204 64,550 309,450 273,691 267,880 266,295 253,314 As Reported Share-based Payment Expense 14,518 15,494 19,762 19,102 18,240 17,787 21,805 73,981 60,437 53,188 63,822 68,876 Purchase Price Accounting Adjustments Associated With Share-based Payment Expense - - - - - - 4,801 2,872 181 - - As Reported Restructuring, Impairments and Related Costs - - - - - - 32,807 63,800 - - - Adjusted EBITDA 261,871 282,979 295,742 325,551 334,782 370,437 381,251 462,539 626,288 731,018 920,343 1,166,140
RECONCILIATION FOR SIRIUSXM Unaudited For the Years Ended December 31, 2013 2012 2011 2010 2009 Cash Flow information Net cash provided by operating activities $1,102,832 $806,765 $543,630 $512,895 $433,830 Net cash used in investing activities $(700,688) $(97,319) $(127,888) $(302,414) $(248,511) Net cash used in financing activities $(788,284) $(962,491) $(228,443) $(7,279) $(182,276) Free Cash Flow Net cash provided by operating activities $1,102,832 $806,765 $543,630 $512,895 $433,830 Additions to property and equipment (173,617) (97,293) (137,429) (311,868) (248,511) Restricted and other investment activity (1,719) (26) 9,541 9,454 -- Free cash flow $927,496 $709,446 $415,742 $210,481 $185,319
RECONCILIATION FOR SIRIUSXM Unaudited For the Nine Months Ended September 30, Cash Flow information 2014 2013 Net cash provided by operating activities $888,168 $744,257 Net cash used in investing activities $(61,922) $(119,954) Net cash used in financing activities $(857,466) $(428,464) Free Cash Flow Net cash provided by operating activities $888,168 $744,257 Additions to property and equipment $(87,244) $(118,235) Purchases of restricted and other investments $(1,719) Return of capital from investment in unconsolidated entity $24,178 Free cash flow $825,102 $624,303 Diluted weighted average common shares outstanding 6,208,569 6,446,082 Free cash flow per diluted share $0.13 $0.10